A Tribute to the Thoughts of Another and his Friend"Everyone knows where we have been. Let's see where we are going!" -Another

Saturday, February 19, 2011

How is that different from Freegold?

FOFOA reader and supporter Cyril asked me by email:

I have a little question that I’d like to ask you. I don’t know if you are familiar with Peter Schiff: he has a radio show every day where he talks about macro-economics.

So the other night, I was listening to it and a caller brought you up in his question. He was a little dismayed that Peter Schiff was not aware of your work (and so was I). That’s probably why he didn’t do a very good job in summarizing the Freegold concept, but to be fair, I don’t know if anyone would have been to able do it in 20 seconds. But here’s the exchange:

Peter Schiff’s first reaction was to ask “OK, and how is that different from what we have now?” I realized that this was a question that I always had in my mind and never found an answer for. Right now I can buy an ounce of gold for $1373.70. I can also buy the same ounce for 1015.84 Euros. This means that 1US Dollar is 0.000728 ounces of gold and 1 Euro is 0.000984 ounces of gold. How is that different from Freegold?

Good question Peter and Cyril! By the way, Peter Schiff may not have heard of the FOFOA blog, but he has met me. He signed my copy of Crash Proof at one of his "events" in early 2008, before I had even heard of ANOTHER and FOA.

Now most of you know that I consider this topic, Freegold, to be extremely deep. But I'm going to try not to go there in this post. I'm going to attempt to "superficially" focus only on this one question in the hope that this post stays reasonable in length and finds its way to Peter.

Sure, gold is floating against all currencies today, just as it has been since Nixon ended the fixed gold standard. But it is a pretty volatile float, wouldn't you say? From $40 up to $850 back down to $250 and up again to $1,400. All in 40 years. During the prior four decades, gold was locked at $35 per ounce. That's some long term stability! Granted it was a synthetic stability, prone to explosively painful crises like the 1970s.

Freegold will once again deliver a stable gold price, unlike today. The kind of stability Freegold will provide, which will be able to last much longer than 40 years, will form the bedrock foundation of global trade, monetary policy and international finance for the next era. And it will be stable because of two main factors:

1. SUPPLY - Gold will trade on a stable supply of above-ground physical gold in the absence of external influences like "paper gold" (Bullion Bank "BB" liabilities that can be created on demand by a mere book entry on a BB balance sheet, etc.).

2. DEMAND - Gold will also trade on a stable demand due to the global clarity that will emerge as to gold's best and highest function—being only a physical wealth reserve asset and nothing else.

How we get there is easy to visualize. As the physical reserves within the BB system are all moved into allocated accounts, at some point the remaining claims will simply have to be cash-settled. At that point all paper gold markets will cease to exist and all that will be left is the stable supply of above-ground physical gold in the absence of external inflatable (or deflatable) influences.

And when this happens, the dollar will fall in value very quickly, and with it, all savings tied to debts denominated in dollars. What this will reveal on any balance sheet that contains both dollar-based assets and gold, is that gold will rise to fill the void left by the dollar. The balance sheet will not collapse. But the wealth will have transferred from dollar assets into gold.

This is the main significance of all the Central Banks stocking up on gold today as well as the Eurosystem's quarterly mark to market party, I mean policy. When the BB fractional reserves finally run out, this will be a very quick revaluation.

But while I expect a quick and dramatic reset at some point in the near future, this process can be clearly observed happening in slow motion today, both from a political standpoint and on the balance sheet of the ECB. In my post, Reference Point: Gold - Update #1, I highlighted the results from the latest revaluation party, a decade-long trend that has brought the "foreign fiat reserves" portion of the Eurosystem's balance sheet from 69.5% down to 32.9%. Meanwhile, physical gold as a portion of the Eurosystem's reserve assets has risen from 30.5% to 67.1%, even while declining in volume. A virtual flip-flop as I called it in my post.

So while most cannot understand the significance of this slow motion trend today, the explosive "rock meets hard place" encounter that is overdue at this point will be sure to wake even the sleepiest sheep. And at that point gold's best and highest function—being a physical-only wealth reserve asset—will be known by all. And the meeting of such a wide (awake) demand with a newly physical and stable supply in the absence of external (paper) influences will reveal a gold price that is multiples of any that has ever left Peter Schiff's lips.

The next step in discovering how Freegold (or Reference Point Gold "RPG") is different from what we have now is the concept of "captive money." Today gold is traded like a volatile commodity by gamblers who like to call themselves traders. Or else it is held as a small percentage of one's wealth for the expressed purpose of "insurance." Gold is actually a pretty poor inflation hedge as long as it is under external influences such as the inflatable supply of paper gold BB liabilities. So the only way it can even hope to perform as prescribed is as insurance in physical form only. Yet so many investors still hold "paper gold" as the insurance portion of their portfolio. This alone really highlights the confusion in Western "professional" investment Thought.

Most people are savers, not investors or traders. Yet today we are all forced to be investors chasing a yield because there is no such thing as a perfect inflation hedge. If there were such a thing, a large portion of the "investing public" would not be anywhere near stocks and bonds. Even the most "risk free" bonds, US Treasuries, have the greatest risk of all, currency risk. And in the case of the dollar, this is exposure to a risk that, today, is well out of the hands of the currency manager thanks to seven decades of functioning as the global reserve standard.

Furthermore, a saver must look deeper than the CPI, or even its shadow-equivalent, for the real inflation that must be protected against. And that is the inflating VOLUME of savings with which one must compete. A perfect inflation hedge would not only keep up with the shadow-CPI but it would also rise in VALUE (as opposed to volume) relative to changes in aggregate monetary savings. Given such a "perfect inflation hedge," I maintain that it would become the Focal Point of savers all over the world.

I read an interesting piece on Egypt by George Friedman of Stratfor. I thought it described an interesting little microcosm of the dollar's international monetary and financial system ($IMFS) and how it is detrimental to savers. Here are a couple snips from the article:

"One cannot simply walk out of Egypt, so since the time of the pharaohs the Egyptian leadership has commanded a captive labour pool. This phenomenon meant more than simply having access to very cheap labor (free in ancient times); it also meant having access to captive money. Just as the pharaohs exploited the population to build the pyramids, the modern-day elite – the military leadership – exploited the population’s deposits in the banking system. This military elite – or, more accurately, the firms it controlled – took out loans from the country’s banks without any intention of paying them back…

"There were many results, with high inflation, volatile living standards and overall exposure to international financial whims and moods being among the more disruptive.

"Over the past 20 years, three things have changed this environment…

"By 2010 the system was largely reformed and privatised, and the military elite’s ability to tap the banks for “loans” had largely disappeared. The government was then able to step into that gap and tap the banks’ available capital to fund its budget deficit."

I realize that I am side-stepping George's point here to make my own. But the point is that today, all over the world, people's savings are "captive money" inside the $IMFS. One cannot simply walk out of the $IMFS today and hope to retain one's purchasing power over the long run. Therefore the people's savings, their 401Ks, IRAs, pensions and trusts are all captive to the managers of the system. Under Freegold this will be different.

That's the big difference for the majority of todays "investing public," the savers. But then there are those dastardly traders. Those traders are not only capturing fiat profits from gold's volatility, but they are creating the very volatility they aim to capture, which itself is the antithesis of gold's best and highest role, that of being a stable benchmark wealth asset. The activity of trading "gold credits" for volatility is part of the reason we do not have Freegold today. Not only are the traders never holding real gold, but they are denying the rest of us the beneficial stability of price that gold was born to deliver. This "gold gambling arena" will not exist in Freegold.

First of all, there is no incentive for people to gamble on price changes in something that is stable in price. And second, the gamblers' casino chips, ambiguous claims on some illusory pile of gold somewhere back in the cage, will no longer exist. This is probably the most important difference between Freegold and what we have today. After the failure of paper gold liabilities to continue trading at par with physical during the dramatic revaluation, every discrete piece of the 160,000 tonnes of above-ground gold will be **unambiguously** owned!

Furthermore, in every gold exchange, there will be an **unambiguous** seller and an **unambiguous** buyer. This does not necessarily mean that all gold exchanges will be face to face and entail the physical movement of gold. But it does mean the end of ambiguous pools of unspecified gold and its unallocated owners. I realize that this part is difficult for many to visualize today given that it is how a good deal of the gold market presently operates. But I believe that if you give it enough thought, you will ultimately come with me to this conclusion. Otherwise, as Another said, time will reveal all things.

With people's savings no longer captive in a financial system that lends them out at will, interest rates will once again be a direct function of the supply of (as well as demand for) capital inside the system. Yes, banks will still be able to conjure "thin air money" on their balance sheets to make loans, but the aggregate of loans within the banking system will once again be constrained by the capital ratios in the banking system as no secondary market for this debt will exist. And as a result, we will witness the return of prudent lending standards.

All of these subtle changes/differences will flow from the inevitable loss of the paper gold market that presently denies us the stable benchmark that is gold's ONLY job. As will the end of the seemingly infinite well of power that currently springs from the U.S. dollar printing press. And with the loss of this free-flowing fountain of power what I like to call a global **meritocracy** will emerge. And by global I mean on all scales, from national, regional and international on down to the individual.

Through the unavoidable **meritocracy** that is coming straight at us with the inertia of a runaway locomotive, we will witness the unexpected retreat of the social welfare state as well as the reversal of the destructive force of regulatory capture. You see, without the captive money of the savers to be diluted, the printing press becomes a self-defeating mechanism that will be controlled because it will be in the self-interest of the printer to do so. As F.A. Hayek wrote (which I quote and source in Windmills, Paper Tigers, Straw Men and Fallacious Fallacies):

"There are many historical instances which prove that it is certainly possible, if it is in the self-interest of the issuer, to control the quantity even of a token money in such a manner as to keep its value constant."

"I have no doubt, and I believe that most economists agree with me on that particular point, that it is technically possible so to control the value of any token money which is used in competition with other token monies as to fulfill the promise to keep its value stable."

As for running straight back to a gold money system (instead of Freegold), Hayek writes (which I quote and source in Freegold Foundations):

"I do believe that if today all the legal obstacles were removed… people would from their own experience be led to rush for the only thing they know and understand, and start using gold. But this very fact would after a while make it very doubtful whether gold was for the purpose of money really a good standard. It would turn out to be a very good investment, for the reason that because of the increased demand for gold the value of gold would go up; but that very fact would make it very unsuitable as money. You do not want to incur debts in terms of a unit which constantly goes up in value as it would in this case, so people would begin to look for another kind of money: if they were free to choose the money, in terms of which they kept their books, made their calculations, incurred debts or lent money, they would prefer a standard which remains stable in purchasing power."

Why Freegold is far better than Another run through Another gold standard time-line which will ultimately end like all the gold standards of the past is Another subject altogether. Check out my post The Debtors and the Savers for a clue to my Thoughts on it. But for this post I simply wanted to lay out the many ways Freegold is different than what we have today.

So here is a quick cheat sheet of the differences covered in this post (which really only superficially scratches the surface as I said I would do for Peter):

This is not a dream or utopia. It is simply the swing of the pendulum. If this list seems to you to be too good to be true, then I suggest you spend some time in the archives and give it a little more Thought. As FOA wrote, "This not only has everything to do with a gold bull market, it has everything to do with a changing world financial architecture. And I have to admit: if you hated our last one, you will no doubt hate this new one, too."

"Return to a gold standard" advocates like Peter Schiff have a really hard time wrapping their heads around Freegold because they are so focused on monetary currency that circulates when what really matters is monetary wealth that lies very still. I think the simplest way to express the separation of these two monetary roles to the gold standard advocate is the application of Gresham's law. "Bad money drives good money out of circulation." In other words, the bad (fiat) money circulates while the good (gold) money lies very still… and floats in value relative to the circulating bad money.

Sincerely,FOFOA

PS. Blondie gets the one-liner of the day award: "So I guess 'Peter Schiff was right!' destroyed any chance of him getting out of his own way." – LOL

217 comments:

I (mostly) get freegold. I can imagine the paper gold market collapsing. However, markets can collapse and then recover. It seems freegold is dependent on outlawing (globally) a paper gold market. How is this accomplished?

@FOFOA: I would like if you elaborate on your definition of "Socialism".My personal view is that we actually live with some kind of a "globalized corporate fascism with a human face". For example I personally do not see Nordic socialism as bad but rather a well managed more honest socialistic system.So if I would define a future trend in this area I would describe it COULD lead to:1. Socializing corporate losses will be hard to impossible due to no pool of public savings.2. More competitive politicians on local level working with given budgets, this due to higher transparency as a response of public demand to see results.3. Retreat of wild IMFs privatizations into hands of big corporations. Let us face it some services, regulations are just better in hands of state.4. Social services will be forced to become more competitive and efficient.5. Expensive bridges to nowhere with uncertain results will be politically hard to do....State has, carries and will keep important vital functions. Lets avoid pouring out babies with dirty water.I would also direct to this Jesse´s post: "A Japanese perspective on the US budget:"http://jessescrossroadscafe.blogspot.com/2011/02/obama-budget-and-interesting-comment.html

With RPG, Indian rupee is likely to be a very very strong currency due to wide acceptance of gold as a wealth reserve par excellence. Is that the reason why the RBI has accepted a new symbol for rupee last year? Perhaps they know about this, perhaps they are preparing for it. Perhaps ECB and RBI will move closer together than what they already have been.

I keep trying to visualize the massive supply of dollars bidding for gold, and it reminds me so much of "real estate" of all types. It will indeed lie very still, and only poke it's head out when the price is very high indeed.

Great post..you really deserve those paper soldiers readers send you to defend the precious.. it would be such a shame writing about freegold without having some weight yourself..I keep my platoon paper soldiers as small as possible to defend the precious.. gonna sack some soldiers tomorrow and send them into the gold coin battlefield, where they will be killed in action... Gold takes no prisoners... Here is my oneliner : he who buys a hole from another, falls into it himself

@Paul: How much money goes from GB to pirate cave islands which help to avoid taxation in offshore banking? I would answer M.T. that "Militarism works fine, until you run out of other people's money". Same to Mr. R.Reagan. Could he outperform Russia cos he made cuts and grew economy by increased productivity or just because he had bigger printing press? Where are the armies of Soviet empire today? But Russia is growing now again, isn´t it? USA still keeping its military & printing press? Against whom, whole world to show its muscles perhaps? ROLF, not anymore. IMO it is clearly called a joke - seen in loosing control in many protectorates. Where were then and where are now the naval forces of GB? Have a look at the budget and check where the money went back then and where it goes nowadays, what is the rate for social services compared to military? :o) Or I will ask her: "Is it good idea to substitute manufacturing with FIRE economy in declining empire?" I think GB is missing a bit earning from those privatized and offshored industries lately. How far would she go if it was not the new oil discoveries? Last time I checked the common understanding was that results of her economical changes plus wide scale privatization were "mixed" and she backed off from giving away vital strategic railroad system and later resigned for different reasons. :o) I ask you: What is more important and which should come first: A basic general public health care and education as a healthy stable ground environment or a growing economy and then maybe public services? How can one anyway properly quantify positive externalities in longer period? (Rhetoric question).

I recommend you to watch carefully this one: http://www.ted.com/talks/lang/eng/hans_rosling_at_state.html, especially around 7m... Social development BEFORE economic development.

We could be discussing for very long and it will be flame talking because our definitions of "Socialism", "Social" and "Capitalism" differs. And believe me I am for the other or rather to say a healthy mix not for "free lunch". But you know what? I like to pay taxes, not too much, not too little, just about as much as I feel a positive feedback. I get many things I value from state in exchange. :o) And I am even able to save enough for later, no crying that state steals from me :o).

One last question (again rhetorical): How can we actually be comparing when Numéraire is twisting our focal point? By GDPs? Should we then compare in terms of different comparable "values"? Like for example in a "value in quality of life" perhaps? Or a long term capability to create sustainable added value? Will private companies be able to create and support highly complex system of educated society in many areas without infusions from above? Can you run CERN from just private sources? IMO there is enough taxes for this and more if you cut where we should and are not cutting where we support TBTFs. :o)

Hi Googel,intersting links you posted. I had a quick look and he is quite into conspiracies! I have a lot of difficulty believing there is enough co-ordination and trust between the significant number of interested parties to form a "cabal" which controls everything and keeps secret natural resources and new technologies etc., especially considering that they must be, a priori, untrusting, greedy and competitive. I think it is much more likely that these problems are emergent properties inherent in the system. For example, gold price suppression is a consequence of multiple claims on gold as FOFOA has explained previously. In a system that rewards short term profits, the inevitable consequence is lack of investment in the future (ie: oil-free technolgies), resource exploitation (tragedy of the commons).Bix seems to be very intelligent and well read - it's just a shame he seems to be following a different trail. Recently he seems to have got completely lost in the forest, as he is advocating silver over gold (http://www.roadtoroota.com/public/136.cfm) and we all know how well that suggestion goes down in this neck of the woods! ;-)

this post, succinctly makes concrete what i thought i understood, with details and vocabulary for me to ponder these concepts even more deeply

i thank the world for fofoa and his attraction to freegold thinking, and for his keeping it alive, so that people like myself and even greater minds like peter schiff might find a way to reach this unobstructed horizon in time to exclaim, "wow!! what a view!" Gasp. "It's so BEAUTIFUL!!!"

"From Sam: BARON in May 6, 1998 article (HOT MONEY DOES NOT STAY IDLE LONG) on Gold-Eagle web site poses question of what happens to EMU currencies when Euro takes over. He strongly suggests 240 Billion of supplanted currencies will end up at the LBMA where 12 Billion in paper gold is traded daily. The arithmetic works out to an explosion in the gold price of US$300/oz (present day) to US$6000/oz if this 240 Billion in "hot money" finds its way to the LBMA. US$6000/oz is your figure for the present interbank value for gold. Is the RED BARON on to something ?

Please comment !

Also, For whatever percent backing by gold, will the Euro be convertible to physical gold, and by whom (i.e. all or limited) ?

Sam

ANOTHER: Sir, The history of "Hot" paper money does show it to "burn easily" from " much heat"! If you read my Thoughts in today's replies, we see much "fuel" in dollar derivatives trading in foreign markets. Much of this trading represents a "claim" on physical gold that may become "a transaction for physical gold" as dollar reserves are displaced. The $6,000 valuation of gold can only be true if currency deflation destroys enough dollars to bring it down to that range. Without deflation, the dollar will be devalued much lower than this (higher gold price)! Once the Euro is created and begins to effect world trade (late 1999 perhaps), the gold market will begin a transition as never before! I think it will be interesting to follow the politics of this change, yes?"

Your arguments are always about the physical gold side of the future fiat-gold relationship.

What I see when I try to imagine a system you describe, is volatility, not stability of the freegold/Fiat(s) relationship.

The idea that we will see less socialism, is precisly the part that seems unrealistic. This is the main reason I have deep doubt about the part of the free gold theory of "historical forces at work". Frankly it looks to me like a "Utopia de Jour" (or even worse "BS de jour" of the banksters from Another's circles)... The socialist mentality/dependency is so ingrained that it will not give up so easily. -- Look at the post-communist countries of Eastern Europe -- In which of those countries did the "socialism die"?

To me the conection is simple: If the state has to rely on issuing fiat, it is exactly because it destroyed private enterprise it can tax enough to pay the bills. -- As long as there isn't enough employement for everybody, socialist aspect of the system will go on, regardless of the clothes it wears. Every demand of the people on the government creates more socialism and less free enterprise. Howard Buffet 1948 This demand would probably expand and not shrink, when people truly understood that the goventment "has the right" to print the "temporary money" facilitating exchange. Knowing that it is as simple as "press the button" for the elected official to get me what I want, why in the world wouldn't I would demand more for my vote! After all it would be no harm done to the sociaty since people's savings were safe in physical gold! -- How can this kind clarity about the nature of currency vs gold would make their ratio stable is beond my imagination...

Also, once governments have the invisible way to finance themselves removed Greenspan 1966 (confiscation of savings via inflation will be impossible with gold savings) -- They will have to relay even more on issuing fiat. This time without constrain of the check kiting schemes with the bankers, who as the result of the transition might see their roles deminished... (On the flip side the position of politicians would be enhanced)

Please don't take me wrong -- I do belive we are heading towards destruction of the paper market in the form we know it today... I am just having a very hard time to see the stable system as the result. Since you must have given this a lot of thought please walk us through this part of the FGT*

Poor Matt from Edmonton. I really admire his good intentions of explaining Freegold to Peter. After my many failed attempts I came to appreciate why the Gold Trail is so long and more than ever that FOFOA is here to help me navigate it.

As always, I'm intrigued with your hypothes/analysis on Europe's transition to Gold as its form of financial backing.

I have two questions. In its present form, isn't the Euro doomed (and will that derail or accelerate Freegold) ?

Silver appears ready to explode given its demand/supply dynamics. What is supposed to happen toSilver?

It is clear the Europeans and Asians pay attention to history, and the Americans have not. It makes sense you advocate gold's prowess since India and China (and their citizens) are stocking gold like capitalists.

I noticed your question was directed to FOFOA, but if I might be so bold-

“ In its present form, isn't the Euro doomed?”

When viewed through the lens of the $IMF System? Yes, Absolutely. Doomed!

“ Silver appears ready to explode given its demand/supply dynamics. What is supposed to happen toSilver?”

Why do you think the price of silver is going up? Is our current state of backwardation a result of short supply from the mines – or a backlog at the mints for manufactured investment grade products? Who are the buyers waiting to buy up silver at any price? Are there any? If and when silver reaches this 16:1 ratio we all hear about -- who is going to part with their fiat currency -- or worse still their gold -- for silver?

Me? I imagine silver will revert to a dollar price commensurate with its value as an industrial commodity – that is -- after the traders are done batting it around like a dead frog.

You say, " The socialist mentality/dependency is so ingrained that it will not give up so easily."

My guess is you haven't been hungry for an extended period.

Read Gonzalo Lira's blog and you will see what people think about socialism after they have taken a long drink.

They are not keen to jump back into the acid bath.

Hundreds of millions of people will be crushed by the dollar's collapse. For fiat to be accepted by this population again, there will have to be stringent controls on the fiat managers to prevent this misery again.

You are looking at a post freegold world but ignoring what it took to get us there.

Who are the buyers waiting to buy up silver at any price? Are there any? If and when silver reaches this 16:1 ratio we all hear about -- who is going to part with their fiat currency -- or worse still their gold -- for silver?

Hmm. Logic might dictate that a substantial number of folks would have already exchanged, in a rather concerted way, currency for silver, thereby explaining, to some degree, why the GSR had collapsed to such a level.

Diamond Jack -- No need to shoot the messenger -- Being aware of something is not the same as approving it :-)

(As to ever being hungry: Does 14 days completely without eating anything count as an "experience of hunger"? What about being self-employed for 30 years and being taxed to death -- is it "socialistic" of me?)

My observation about the socialism not giving up easily is a simple calculation: If almost half of the people work for /depend on the government in all forms (I include the centrally financed/forced health care) how will they survive if the state/socialism shrinks dramatically? I realize that my definition of socialism is not conventional -- What I mean by socialism is the total % of people whose livelihood depends on government checks -- regardless whether they get the check directly from it, or are the checks routed through government subcontractors or partners. How will 150 million people in the US alone feed themselves? They could not give up on the state dependency even if they had some Atlas-Shrugged-Confirmed enlightenment...

You ask if they will accept fiat... This is not my idea one that came form Another's, FOA and FOFOA -- They all say, it will be needed in "unlimited amounts" -- I tend to agree that this is what will happen. The alternative would be stone age -- Another reason it will happen is because this is how it happened many times before after a paper currency collapsed. You get the new improved paper money. What I can't see is this wonderful balance between this new paper and the gold in every flower pot...

-------------------Edwardo -- Did you read this on Zerohedge site: "Merkel’s Christian Democratic Union took 20.8 percent in today’s election, its worst result in the port city since at least World War II, ARD television projections showed. The Social Democrats, the main national opposition party, took 49.8 percent"

Now a quick jump to wikipedia: (...)"The SPD is a full member party of the Party of European Socialists and the Socialist International. It was also one of the first Marxist-influenced parties in the world."(...)

So I suppose this is a confirmation of that I was writing about socialism not giving up: Germans are trying to get the government cheese for themselves, not to see it go to Portugal! It sure does not mean, that all of a sudden the percentage of state smootchers has became smaller in Germany.

Correct, but it must be improved. Unlimited amounts in not improved, its the same damn thing

How will 150 million people in the US alone feed themselves?

How will they feed themselves?, you mean without the government telling them what they can and can not eat and how hot the food must who must be employed in what ratio to skin tones etc? I guess there is no choice but to offer ourselves, as the ancient Israelites did to the Pharohs, we will be your slaves in return for bread.

Why focus on why socialism would survive when it is far lighter to see that it is unsustainable in many ways. It is what got us in this mess of infinite souvereign debt ...

Government will not want to give up, power wants power, but we wlll be so fed up with it. they ARE the problem. we will see.It is always all just about the next election and never about solving anything. It is about the misuse of law. How come government gets to sue everybody ? shouldn't even be a party, just be the arbitrage. big reform is needed !

Ask what all those people used working for government are going to do ? Better ask how we could afford te keep paying them. because we can't. when this mess ex- or implodes within the comming years a new generation politicians will take over. they will not want to be forced into collective insurances again that just robbed away the saving of everyone.

Nobody will outlaw anything.Paper gold will collapse under the immense and unbearable pressure of supporting the mind-bogglingly huge weight of the $IMFS Global Ponzi Extravaganza that has levered up from its very existence, and the value which survives this implosion will be consolidated into physical gold.The impact, repercussions, and most importantly the resulting new perspective/paradigm gained will be such that no one will want to go (back) there again, no legislation required.

Put it this way: when you burn your hand in a fire, do we need to pass a law to prevent you doing it again?

---------------------

Good to see attention turn toward the paradigm on the other side of the focal point- this is where things get interesting, IMO.

I would just like to make an observation (or two).

Before launching into debate regarding socialism, human nature etc. when discussing a Freegold paradigm, it may be useful to back up the bus to consider the causes of these. What are they inherent to?

"Human society arranges itself in response to the monetary system it utilizes to facilitate the flow of value between its constituents. This is to say that the monetary system dictates the nature of the society, and the motivations which drive the behaviours of its individual members."

Because we are examining an emergent (and radical) change in the monetary system, we are going to witness radical change in the structure and behaviour of the society that (re)crystallizes around it.

Thus, much of that which we currently regard as inherent will be swept away. In this light, it may be judicious to examine our preconceptions regarding many different "isms", and whether these will still hold in the new paradigm.

Every preconception needs to be evaluated on the basis of "what is this inherent to?", and "where do the underlying motivations driving this lie?", amongst other things. If this type of evaluative process is not conducted first, we can develop no meaningful basis for such a discussion, and will simply be talking at cross-purposes.

This is a discussion that is not really suited to a comments section format such as Blogger, although FOFOA is clearly the place it begins.

I scroll through the names of the commenters above; think of the dozens of previous commenters here; the handful who first saw this view years back; and the thousands who come here daily who have never commented, but who have their own experience with our monetary system and its results and perspectives to share; and think we could get one heck of a fascinating discussion going about a Freegold world, if we wanted to.

One more thought.

Can we broadly agree, and I believe that those with a reasonable grasp of Another's perspective can, that we are considering the death of an inequitable system ($IMFS), and the birth of an equitable emergent replacement (Freegold)?

If so, then it follows that the new paradigm looks to be a "positive" development, thus "doomers" may need to reconsider their perspective.

@Blondine: "A monetary system is anything that is accepted as a standard of value and measure of wealth in a particular region.

However, the current trend is to use international trade and investment to alter the policy and legislation of individual governments. The best recent example of this policy is the European Union's creation of the euro as a common currency for many of its individual states. Modern currencies are not linked to physical commodities (silver or gold) and are not a contract to deliver a good or service. As such, the value of a currency fluctuates based on politics, credit worthinesss, perception, and emotion in addition to monetary policy." ~wiki

The question is: Are our social systems really wrapped around the monetary one or the other way round? That it is the reflection of our social interaction? Is the emergence of a freegold system a result of our will and a joint network connectivity effort of some thinkers or is it a need which emerged spontaneously (sooner or later, after so many failed tries) as a response, a wish, a need, filling a gap? IMHO both, more the other, some just realized the direction and a need, evaluating dangers of present IMF system whose life was extended few times. I think much can be found in studies of biological systems especially feedback loop directing evolution and transitional stages. Note that before any transition there is a high increase of entropy. Another was highlighting about emergence of confusing signals before transition.For mine above comments I tried to reason WHY I personally think SOME things will BE possible and WHAT will NOT be possible anymore and from that I tried to reach further. No matter what one thinks about -isms, different societies will interpret freegold differently based on their needs and there will be a certain level of competitiveness among states. I also would like to point out where from the freegold comes from - a continent with a good memory and a place where many ways were tried and many failures shown what is possible and what is not. I would also remind the Trichet´s comment from last post about distinguishing between monetary and fiscal. In Freegold it will be possible to spend more than what you have earned but that will be a short life of any politician, they will need to adjust their policies being more pro-capitalistic or socialistic, pick your choice. Which one will be more healthy will see our children but my opinion is that the socialistic will have starting advantages because of the existing networks. Compare collapses in Argentina and in Russia.(Blondine->Blondie, sorry, misspelling)

to your last thought, yes I would like to see this as positive. no doom and gloom here. although it might be a rough ride. but seems part of the deal. true freedom can never be without danger.

What will come next ? When I grew up I always asked why it was that there were hungry children in the world, and the answers I got, until this day, just didn't do, they made no sense.I believe the new system evolving will anwer this question much better. It will adress the real problems. at last. we might even solve them now. instead op chasing the consequences all the time. no more export of inflations

1) What is the difference between the "unrestricted" or "unlimited" amounts from the perspective of the issuer? Doesn't the word "limit" mean the same thing as "restriction"?

2) As to improvement -- it only is so because the beginning of the paper money cycle (which is more pleasant then the end when it already is unusable). On the end of the cycle "unrestricted" means the same ting as "unlimited" even if the meanings were different at the beginning. Either way also -- it is some "overlords" who decide on limits or restrictions. They certainly do not want to be restricted or limited in taking whatever they want...

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"How will they feed themselves?, you mean without the government telling them what they can and can not eat and how hot the food must who must be employed in what ratio to skin tones etc? "

No, not about government telling them, but without government sending them a check, or filling up their ATM card on regular basis. -- I still don't see how after reading Ayn Rand 100 million people of all a sudden can get a stream of income form a different source... But in a theory, unlike in life anything can work... Socialism can simply vanish overnight.

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Honestly, when I read FOFOA including "The retreat of Socialism - The reversal of regulatory capture - Meritocracy" in his list of benefits of freegold, I have to scratch my head... (Seems like a wishful thinking.)

Btw. lending standards and reserve requirement rations for the banks are already "returning" without the free gold. Both mean restrictions on the banks, so this phrase "unrestricted amounts" is a little puzzling, as you can see)

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I see freegold as an offer of a new New Deal between the Lords and Peasants -- "We will stop confiscating your savings through inflation. You will continue to serve us by taking the paper we print as a medium of exchange" (as "today's value" without the current pretension that the value will last.)"

But, I have to remind, that the offer has not being made yet, or the EU offer is useless until the "$world" ends.

under Freegold government will have to be much different. The amount of gold your currency buys will show the economies strength. Economies can then therefore not affort to have big governments anymore. economies have to be competitive and productive to be able to save in gold. government is not productive, it only costs and redistributes money. by definition.

I'm with Mortymer, inasmuch as to say there is a definite role for *limited* government.

But Freegold's restricted ability to print fiat without experiencing the now-measurable consequences, will without doubt put an end to the rampant vote-buying socialism many of us have become accustomed to living with. Which, to my mind, will be A Good Thing.

This is how we are delivered to a meritocracy, since the government can no longer afford to issue fiat and pay it over to the workshy. Work in some productive endeavour, or live with a punishingly austere standard of living on the Welfare State's true "safety net" for those absolutely in desperate need of assistance. Harsh, perhaps, but ultimately, fair.

If you have excess wealth to store, you'll store it safely in gold, without fear that your government will dilute it like they do today, until such time as you have a need to exchange this wealth for something else that is of value to you.

I am in no place to keep sophisticated discussion about the subject as I have not studied the theory of "states" much, know a little, lived in few states (not USA) but I would make a very simple statement that they play very important role in our lives if we want it or not. Just some very basics info: http://en.wikipedia.org/wiki/State_%28polity%29I would also appeal to check a bit a Nordic type of socialist states:http://en.wikipedia.org/wiki/Nordic_model

Do you think they get Freegold? Has anybody tried to approach them? Those of you that have a deep understanding of Freegold could try! I'm not an expert but it seems they are almost there. Those gold swaps between the central banks that they talk about are the ones done at Freegold prices right?

polarny said:" it is some "overlords" who decide on limits or restrictions."

No, it will be the market deciding this, via the exchange rate in gold. Revisit the Hayek quotes FOFOA used in the post.

polarny said:"I see freegold as an offer of a new New Deal between the Lords and Peasants -- We will stop confiscating your savings through inflation. You will continue to serve us by taking the paper we print as a medium of exchange"

... and the "Peasants" will determine the value of said paper, via the exchange rate in gold. Revisit the Hayek comments. The market will shun paper that doesn't measure up. Gold is the yardstick by which it will be measured.

To paraphrase myself:"...it may be judicious to examine our preconceptions... Every preconception needs to be evaluated on the basis of "what is this inherent to?", and "where do the underlying motivations driving this lie?"..."

When we will truely measure economies through currencystrength enforced by mr Market, I see only really need for government to protect propertyrights. there will always be a need for arbitrage and rule of law or else capital will simply not stay and look for a safer place. but most other things a true free market will do a much better job.

and alsowe will still always want to work together and cooperate. It is deep within human nature. collective knowledge we are better off that way. therefore a system that will efficiently facilitate unforced cooperation will thrive, but systems with forced upon solidarity are done for. they will be priced out of the market. that will mean end of incometax ! I think government will finance only through international competitive salestax.

Ender, Paul: "under Freegold government will have to be much different."- I think all got that already. How else if there is no stream from tax by inflation?"The amount of gold your currency buys will show the economies strength."- IMO GDP in terms of gold per capita will be better indicator. Not all earned value needs to be spent for gold; it is recycled into many things, smart economies will be investing into R&D, public infrastructure and mainly into people. Some other societies just tend to save more. Anyway gold inflow/outflow will show also a quality of currency management, strength of economy, perceived risk in area, quality of laws and plus some more... I would also look deeper into how much of gold you will afford with your salary substituting those many functions of state you would rather dismantle and later realize that shared costs are sometimes more effective. :o) "Economies can then therefore not affort to have big governments anymore."- Do really economies choose governments as is your statement? I think you got it backward. Budgets will need to be balanced and some governments will be more successful than others. States with uncompetitive overbureaucratic governments will not have good environment/soil for supporting successful economies. Of course the question then is if you are optimistic or not and believe if in long run there will be a positive loop and political will left to steadily improve political system or not. (Exodus of brains again as example?) And what if into power will come next megalomaniacs promising but destroying others or if people during of our lives will be capable to understand freegold fully and will choose good leaders. It is a known fact that from history we do not know good kings, they were not interfering much in happening just carefully carving. More successful pro-economy wise efficient governments will be able to afford better (not necessary bigger, could be just plain more efficient) social services and then again gain more in economy... Coherent bit autocratic systems could possibly have also advantage. I put the TED video for purpose, check it please. "...economies have to be competitive and productive to be able to save in gold. government is not productive, it only costs and redistributes money. by definition."- Government = "system by which a thing is governed" it is not derived from word "earn", we spoke earlier about states, -isms, functions of states. Governments are like fiat currencies, they leave when it is their time, economy and state stay, they boom or go down, "social" and "socialistic" are again completely another words.

I would say the fruits of inflation go to the issuer of the currency, which is strangely often not the government. theu needed socialistic incometax for that. Me thinks this will change and not in favour of the banksterclass.Who is gonna make the GDP and for whom ? What does Dutch GDP tell you about EUR ? the goldprice will be made by the market !

yes i see economy forcing, look at EU now, economy is forcing governments to adapt and reform.a government claiming to control economy doesn't know shit from shinola. or just look at bernanke :-)

‘They are already floating, and in fact they are sinking.” / Peter Schiff

If you pay attention to that statement you’d know where the problem of FreeGold is. Once you put the FIAT in the system it sinks as it’s designed to paper the loss up should there be any “political will” asking so. You claim that FG will make socialism retreat but socialism happens to be a gigantic pile of “political will” to begin with. By design it’s the FIAT rather than socialism will retreat (or in Peter’s words “sink”) when confronted with the political will.

Once it’s clear FIAT only sinks then it kicks off Gresham's law. I don’t think gold will always be there in such system for the savers as FIAT starts to sink gold will go into hide. So while you are able to keep your past savings in gold, you won’t get that guarantee for your future FIAT pay checks.

Bottom line, FG is relying on government to have the restraint from going crazy with FIAT while Peter Schiff is saying there’s too much of conflict of interest over there in the government for them to do what you are hoping, which is why you just take FIAT away from them and put in a hard standard of sort to lock them up.

FOFOA writes in his most recent post:As for running straight back to a gold money system (instead of Freegold), Hayek writes (which I quote and source in Freegold Foundations):

"I do believe that if today all the legal obstacles were removed… people would from their own experience be led to rush for the only thing they know and understand, and start using gold. But this very fact would after a while make it very doubtful whether gold was for the purpose of money really a good standard. It would turn out to be a very good investment, for the reason that because of the increased demand for gold the value of gold would go up; but that very fact would make it very unsuitable as money. You do not want to incur debts in terms of a unit which constantly goes up in value as it would in this case, so people would begin to look for another kind of money: if they were free to choose the money, in terms of which they kept their books, made their calculations, incurred debts or lent money, they would prefer a standard which remains stable in purchasing power."

To spell it out again. Under this new regime if the issuer DOES NOT keep their currency stable the citizens will exit it and transfer their longer term currency holdings into gold. When the currency issuer stabilises their currency again the capital stored in gold will flow back into the currency and out into the economy.

Nixon switched off the political "pain receptors" in 1971. Freegold-RPG will switch them back on. The pleasure-pain feedback will come, in part, from the general price level and capital investment. If a currency unit is falling against gold it will also be falling against other currencies and prices will rise, for example, the oil price. Capital (gold) will also be "rationed" by the market and the ensuing economic slowdown will also cause pain.

FOA - Gold Trail 1"As an aside, I hope the US will enter the paper arena and allow a controlled burn as paper (gold) prices rise. This would be the most "saving grace" for all long derivative (and stock) players. But the leverage creation has been so immense these last few years that I am afraid Another is completely right. All paper will burn! Completely!"

FOA (05/14/00; 20:39:25MT - usagold.com msg#22)Mothers: the only real gold of this earth!

FOA - Gold Trail 2 (My emphasis)It's easy to see today that most of the major world oil reserves have had their value politically converted by the Euro's successful birth. The current trading value of the Euro is a small factor compared to this "existence" worth in our political currency wars. This Euro has broken the "cheap dollar" value placed on oil by our one currency world and now allows dollar oil prices to soar without constraint. Oil has indeed been rising after the Euro's first few months of existance The prize of this master play on our Chess Board ,,,,? This new pricing thrust, unlike early OPEC drives of the 70s and 80s, will crush the modern paper gold banking game and place the dollar and Euro on a level playing field.

And so the contest begins for real,,,, no longer must we talk in a future mode,,,,,May the best man win!"

NEWS of the civil unrest across north Africa, the Middle East and central Asia has rightly dominated the headlines this month. But it could be that political events closer to home eventually lead to a reassessment of risk.

Ireland’s general election takes place this Friday, and the chances are that a new government will soon be at loggerheads with the European Union leadership. If Fine Gael (with or without Labour) succeeds in ousting the deeply unpopular Fianna Fail, they will work to adjust the terms of the €85bn EU/IMF rescue package. They will want to remove the government pension fund from the deal, pay a lower interest rate on the bailout funds and make senior bank bondholders take haircuts. At the same time, they will fight to maintain the country’s attractive corporate tax rate.

This will add to the pressure on German Chancellor Angela Merkel. Recent polls show that the majority of Germans oppose further bailouts of weaker Eurozone members. These findings were borne out over the weekend when her Christian Democratic Union party lost control of Hamburg in the first of seven state elections this year. With Bundesbank president Axel Weber no longer a candidate for heading up the European Central Bank (ECB), and other EU leaders rounding on Germany and France at the recent summit, Merkel is looking increasingly embattled.

Last week, there was an unprecedented jump in borrowing from the ECB’s Marginal Lending Facility (MLF). From €1.2bn at the beginning of the week, borrowing shot up to €15.8bn on Wednesday, and €16bn the following day. The MLF charges banks 1.75 per cent to borrow overnight, compared to the ECB base rate of 1 per cent. Anglo Irish Bank and the Irish Nationwide Building Society tapped the facility.

There are a number of theories circulating to explain why these banks would want or need to move to an expensive overnight borrowing facility from the ECB’s Main Refinancing Operation (MRO). Some are benign and others not so. So traders need to keep a close eye on the euro over the coming days, with any weakness in the single currency serving as a red flag.

Well Costata, as a professional mother, and I do mean professional (raising kids for 30 years, youngest of 4 graduates highschool this year), I know when the listener (temporarily deaf) is not hearing.

You can talk until you are blue in the face and Rui will not hear or understand. Frankly because Rui does not want to hear or understand.

Rui wants attention and nothing more. If he/she were truly as opposed to the theory of freegold as he/she appears, then he or she would have disapeared from this blog long ago.

If he or she wanted to simply debate the merits of a freegold theory, then he/she would have become bored and vacated long ago as well.

However Rui is still with us, because he/she wants to be heard and validated. And Costata you aid and abet this by responding (no offense intended, you are not the only responder)

The reason I bring this up is that when these people, like Rui for example post a few times, it tends to shut down what I would define as constructive dialogue.

No One says anything, because they don't want to be part of the Rui-like dialogue, but they don't know how to move beyond it.

How about discussing Ireland renegging on IMF bailout which sets off a haircut wildfire and possibly brings down european banking system.....gotta be good for gold eh?

How about the fact that all this is going on in europe (10's of billions in mystery punitive bank borrowing from ECB etc.) and the dollar cant get off its ass...

catalysts for freegold everywhere you look

IMHO its time to spend some energy focusing somewhat on the current fires burning everywhere and incorporate them into RPG liftoff !!

Sometimes taking realtime events and plugging them into the puzzle is more interesting than disecting the theoetical over and over and over......imho of course :-0 with much love and respect ,newbie E.

I take your point. Responding to some of these Gold 1.01 "pundits" is to some extent a distraction from more interesting lines of thought but there is another way to view this matter.

There are many readers of this blog (and the comments) who never post a comment. Sometimes there are quotes and references on other blogs about Ah-ha moments people experienced here. A reply to our Gold 1.01 class may be a lightbulb moment for some reader out there. Perhaps that's worth a diversion. Perhaps not.

We have pretty much been under FreeGold since 1980 when gold peaked at 850. 850 might not be the equilibrium price but it’s probably close enough. Lots of ingredients of FG were in place: transactions were done in FIAT, gold was traded in the open market to signal the currency strength and so on. Did it stablize the system? I guess not.

As I said there’s too much conflict of (short-term) interest for government to act rational. They want both credit expansion and a mechanism to paper bad loss over for political reasons. If you give them the FIAT tool they go for it. If they have to rig gold price to hide it they wouldn’t hesitate. We have seen lots cases, have we not?

What did they do after the 87 crash? A Plunge Protection Team. What for Long Term Capital debacle? Bailout. What about Nasdaq crash? Lowering the interest rate to create a new housing bubble. What after the housing collapse? TARP / QE. What about this PIIGS crisis? European edition of TARP. And what about gold price all along? It has been rigged through and through 7/24/365.

Every time sth blew up, they just papered it over to socialize the loss. Whom would they socialize the loss onto? It cannot be the debtors, right? So it has to be the savers you therefore can forget about them giving you a chance to keep your savings in gold. Well, your past savings maybe if you are vigilant enough. But your future pay checks are screwed.

If you start a system out with a backdoor FIAT to concede to “political will” then there’s no end to that concession. That’s just how it works. That kinda system may revert it back to the 1980 status but it’s not stable. Don’t get upset with me for pointing it out.

BTW thanks for that “motherly” love, Wendy, although I’m not exactly at the age of still seeking attention but thanks anyway.

-A relatively stable medium of exchange is essential for effective operation of the market price mechanism and stable economic exchange.

The large above ground stock of gold and the price surge in the "Freegold" scenario dictates that a large change in demand, after the quantum transition to higher prices, is unlikley.

It is possible that fiat or token money can be stable but historically when governments (read banking interests) control its issuance it is relentlessly and disruptively debased.

The idea that the BIS (Bank for International Settlement) - at the heart of the gold market rig and a gathering place for the current central bank "elites" - could play any role in the proposed new stable fiat money (step right up here folks!!!) built on the back of gold as a savings medium, is amusing.

We've been down the central banking, IMF, BIS road ad nauseum. The public appetite for just one more mint (a hat tip to Mr. Creosote) after that noxious meal will not be there.

-I would also like to add that the role of gold as money is essential for setting of interest rates with interest rates being determined by loan demand in a stable gold-money system.

Without this gyroscopic stabilizer for the economic platform, fiat or token money cannot function properly. One has to guess at interest rates in an environment of fiat/token money.

Token money for relatively insignificant purchases can exist alongside gold money, but it cannot exist as a gold money substitute because of the important role that gold money plays in determining interest rates using market feedback.

It's funny seemingly being called a new name in each new post. Some folks need to grow up a little, and I doubt I'm one of them.

If you can keep the harsh feeling down for a minute then think of this: If they have to pay Saudis gold for their crude oil then why do they want you to use FIAT and why do you think it's a right deal?

"No central banks dare play Saudi for a fool." / Another.

I suggest people quit being a fool dancing on the FIAT string held by CBs and government, thinking these guys can apply one more tweak to stabilize it for you. But then again go ahead to call me new names or whatever if that is what it takes to defend your point of view.

Sure I was not very well spoken but I accomplished exactly what I hoped I would.I got him thinking.

Who would have ever thought that gold would be tricking an intelligent Austrian economist like Peter Schiff.

This latest post by FOFOA reinforced no so much an understanding of the freegold concept but an understanding of the flaws in the current system.

Understanding the flaws in the current system are the key to understanding freegold. My new all time favorite FOFOA quote-

"Furthermore, a saver must look deeper than the CPI, or even its shadow-equivalent, for the real inflation that must be protected against. And that is the inflating VOLUME of savings with which one must compete. A perfect inflation hedge would not only keep up with the shadow-CPI but it would also rise in VALUE (as opposed to volume) relative to changes in aggregate monetary savings."

New to comments but not new to the topic, the thread, and the thinking. I can no longer remain silent in my reading of this FANTASTIC forum of ideas. No flames here...

A bit of supposition. FOFOA traces to FOA, who traces to Another. I posit a theory. When one reads all and knows the landscape and the history, I believe the the identity of Another is the well-known James Turk, Founder of GoldMoney.com. (GASP). If you analyze the word usage, the timing (1997), and certainly the concepts of Another and of Turk's writing in the late 90's (and his patents) which I have read, you will likely come to the same conclusion.

GoldMoney IS Turk's attempt at the FreeGold concept, with the aid of the Internet. This assumes (and I believe is true) that the gold is stored/audited in ALLOCATED accounts...not the fictions of GLD and maybe Sprott where this is likely not true...and that the Gold is freely exchangeable with any major fiat currency whose value floats with the whims of the market and the govts.

I am NOT a holder of GoldMoney, so this is sure as $h** not an ad for them. I put this idea out for discussion only.

Second point. Consider FOFOA's concept of focal point, which is so crisply outlined. Everything outlined in the post concerning focal point is true. Money is everywhere and always, fiat or "hard" and example of a focal point--a focal point of commerce. It's true value (as in store of value) is determined by it's quality as money (not currency). The reality of WHY gold is the ONLY stable focal point in commerce is it's entirely unique (sorry silver) position in both history and present reality. It's above ground supply is stable--no deflation threat (again sorry silver in it's industrial consumption) and no inflation threat (it's friggin rare and hard to mine and expands at nearly constant 2-3% per year ONLY).

It is that simple. To watch people struggle with the concept's "long tail" is needless in my opinion. All paper will burn, whether it be fiat (let it be) currency or paper gold. True physical gold is money. Period. It is an immutable truth. You may choose to vault it yourself, or hire Another to do it for you. But do it.

I’ve been following your thoughts on Freegold for over a year now, and I get it.

However, I have to challenge you over the soundness of gold as a “Store of Value” in the longer term. Many sources quote a consensus figure of 160,000 tonnes as the amount of physical gold which is in usable form above ground. Let’s go with that and call this gold the “honest” gold – gold which can already be accounted for. It would appear that the issue of unambiguous ownership of every gramme of honest gold is the most significant single factor which stabilises gold’s Store of Value function under Freegold.

There is very strong evidence that several tens of thousands of tonnes of so-called “black” gold exist in addition to the honest gold and that this black gold is currently under the control of some very influential people. The best popular source of information about this is the book “Gold Warriors” by Sterling & Penny Seagrave. It tells the story of Yamashita’s gold, the bullion stolen by the rapacious Japanese before WW2 and hidden in caches throughout the Far East, but especially in the Philippines, during WW2. It also tells what happened to it afterwards, but I won’t go into that here.

I have to ask you, what would be the effect upon the value of honest gold when black gold is spent, laundered back into existence? I can only think that it would be similar to the erosive inflationary effect that QE has upon our current fiat money. Would this not compromise the whole idea of gold as a steadfast Store of Value?

@Revelho: I myself found in your situation about a 2y ago and searched for this one. I came to conclusion that if that pile existed it would have been played in long time ago. Gold is too much "political metal" to sit for very long time still. :o)There was one very good pdf I found very informative dealing with above ground sum which really looked to me is about those 160t tons, can not find now, will trylater if time.Anyway, here is some another ok file to check to get big picture for basic overview:http://www.gata.org/files/ThunderRoadReport-10-15-2009.pdf

There will be a period of transition as gold is released into the market, that is true. However, once that gold is in the market, stabilization will occur given that gold can only be mined at a relatively fixed rate.

We are completing a century of fiat money addiction and nothing will be solved overnight.

In the current fiat money era, we have very high price instability (see stocks, housing, oil and food prices over the past 15 years) and a gold money system will be far more stable after society completes its fiat withdrawal detox process.

@costataYou write:"PS. Between commencing to type this comment and previewing it the other leading contender in the "numbskull of the year" contest showed up. Ditto for him/her. "Sir, I should remind you that this blog is direct descendant of the writings of Another, FOA and now our brilliant host FOFOA. As far as I remember such language was never used here (by the very large majority at least). So for please try not to zerohedge it. You may opt to read/answer/ignore the writings of other people or lead a separate discussion if you will and FWIW your thoughts are much appreciated here, just as much as other persons` nuanced opinions that help catch the sentiment/culture of the world.Thank you.

I started to buy gold in August 2000 and have bought more every year since. I would like to believe in Freegold but I see several problems. As I understand it, Another started this conversation based on a faulty premise - that the CB's were acting in a benevolent way and that the CB's wanted to wean the world off the dollar standard gradually, to eventually replace it with something that had a foundation on gold. The problem with that thinking, is that the CB's have NOT acted benevolently since the 1970's; they have broken the 7th and 8th Commandments, namely they have stolen the people's purchasing power through money printing, and they have lied about it. Therefore, since Another's initial writings were based on a faulty premise, how can the conclusions be without flaws? Furthermore, what power is going to force the cb's to give up their gold in exchange for paper money? One could conclude Freegold won't happen because "They" won't allow it to interfere with the digital money system they've set up to rule the world.

I'm not going to sell my gold and silver, but I can tell you I am also not relying on them to provide safety

Nice lateral thinking re: Turk, but sorry, no cigar.FOA directly stated Another was English.I understand Turk participated in the early forums.FOA wrote an allegory about him and Reg Howe, where they are the two fishermen with French names (Henri & Phillipe?) who hook the big one (freegold), but don't reel it in, waiting for someone else (Another?) to identify it for them, because they do not know what it is. I see parallels here with Schiff today (and Pinto), unable to see Another's perspective because they cannot get past their preconceptions.Turk continues to be the western technical paper trader Another described so well, par excellence.Without some pretty radical evidence on your part to overturn the large part of the A/FOA archives which are at odds with your theory, I don't buy it.

Revelho,

Freegold utilizes gold as the physical wealth asset outside the monetary system. This "black" gold is as legitimate as all other gold. Most of it will continue to lie still, much as it has up to now, so it makes no difference.Why, when gold has just reasserted its function and shown its real value would vast quantities suddenly be sold? In exchange for confetti?There will be a lot more flow into gold than out, and that flow in will be epic.

@PAYou write:“I'm not going to sell my gold and silver, but I can tell you I am also not relying on them to provide safety”If gold and silver do not provide safety then what can?Otherwise I absolutely agree with your statement with this little addition namely that the western “giants” (bankster priests), that have taken power from historical supper-producers – princes, would hardly share this power (with us shrimps, with 1 500 000 000 Indians or Saudi mohammedans etc.) because they have captured (for now) the flow of wealth through the flow of value. Moreover savers using this token of value – gold (mental<=historical and cultural notion of value and I SEE NOTHING BAD ABOUT IT) instead of vital commodities to store value into will not hurt them (the bankster priests) as much so that they just let go. I hope gold goes into hiding soon, followed by silver, copper etc. The sooner the oligarchic fasho-socialism dies the better. Hopefully we will still have something resembling economy then. Or maybe the 75% population under 25 in the Islamic world will go haliphatic suicidal and we will not have to worry about freegold just the next jihadish bloodbath waiting to happen. Anyway, absent gold as a store of value, one should lose a lot of time (instead of producing sth. of value) just striving to preserve wealth to lean upon in old age. Woe to this world if this remains the case.Cheers!

The same observation could be made by the participants inside every system in stasis before punctuated equilibrium, PA.

They were saying it in Libya only a couple of short weeks ago. You underestimate the power of focussed attention, of a focal point in the collective mind.

Because we all share the same monetary system, it coming into collective focus will have power beyond the control of "They".

This was precisely Another's point. "They" have positioned themselves to not be destroyed by the inevitable, rather than trying to stop it. "They" simply saw the writing on the wall first.

CBs will be recapitalized by holding gold through the consolidation, thus maintaining credibility.The exchange of their holdings for paper will be limited, proportionately, due to the very high gold valuation. Digital paper "money" will work in harmony with gold as the physical wealth asset outside the monetary system.

As Paul said above, it will be a rough ride, no question.

PA, you have your golden parachute, so you intuit the situation anyway, whether or not the details are clear. This will be the same position of the masses you have already frontrun, as gold comes into focus for them.

When it comes into crystal-clear focus, that is the moment that you "pass through the eye of the needle", if you see what I mean, and into the new paradigm from the old.Check this old diagram of FOFOA's, and imagine your perspective moving down from the top, through gold, and on into the lower pyramid of real things. This is a graphic illustration of our (mental) transition.Another, and many others, made this transition of perspective long ago. Some cultures never ventured into the top pyramid at all.

Blondie, I thank you for your explanation. I see where you are coming from, although I must say this blog (not singling you out!) is very deep in cryptic comments, making it hard for new readers to fully comprehend. I see no reason why posters cannot be explicit in their thoughts, and wish it were so.

But back to the topic, those who back digital currency (e.g. bankers, gov't, their courts and police) will do anything to keep the status quo, of which Egypt is a solid example. I think we will see the politicos over-stepped by the military first. But that also means they will use guns to get their way, and anyone who does not fall in line will not have the digital card they need to buy anything (see Jekyll Island). So it is quite possible that gold could be barred from the transaction arena, and having gold will nor permit one to translate their wealth into purchasing power for a time. That is the scenario if the CB's are not "benevolent", and lets face it they have not acted benevolently so far. It has all been malevolent, no?

I think everyone is a little hard on Rui. I too have an extremely difficult time understanding how Fiat survives in any meaningful sense if it well and truly loses it's " store of value" function. Especially if that loss is accompanied by a "singularity" of a massive loss of purchasing power. Who in their right mind would hold fiat? Velocity would be very high. You would get paid and go straight to the coin store....to the point where you would start demanding to be paid in coins.....

Returning to hard money will be enforced by the market, probably disorderly, as people eventually get disgusted at the constantly depreciating digital money that not even CBs' central planning could stop it so your metals will bring you the fiscal safety.

We are at the stage of dumping the CBs and their intervention to return to a free market so the real safety concern is that if you own the metals while others don't then you could be a target when it gets disorderly. You just have to survive the rough part of the transition.

@PAYou write:“and anyone who does not fall in line will not have the digital card they need to buy anything (see Jekyll Island)”1). In fact digital “money” failed miserably in Egypt when the banks closed and the ATMs dried up. Just as FOFOA predicted the hyperdeflationary fuse (the overvaluing of cash at hand) was lit and hyperinflation is coming soon in Egyptian pounds (not so much in USD terms). BTW the POG showed we are in for another bullion bank bottom (if not bottom line) saving revaluation. 2.) Remember I will not sell anything for digital money (for I loathe it too) so you will not have my produce to buy in Jekyll Island ;-)Cheers!P.S.I suggest we do not elaborate further on the worst outcomes for the future, let`s just enjoy life as it is now.

DA, what I meant was the coming digital card, not the present system. In Jekyll, Griffin describes it as a card with "credits" that are arbitrary.

Sean, none of the CB's have acted benevolently. "Another" wrote that they were trying to do the right thing by weaning the world off the dollar. But they have been confiscating the citizen's wealth all along, which is clearly malevolent. So I certainly don't trust them to make the world a better place. I trust them to keep the current system going until failure, taking their slaves as they go along. However, I just stumbled across the Road to Roota chronicles, which are intriguing and I may make some time to study his point of view (does anyone thing that is a waste of time, or worthwhile?)

I guess alot of people here must think my posts are very off topic... rarely a comment...and thats fine...dont do it for attention

And really what could Irish elections on friday have to do with freegold or 10's of billions of emergency borrowing by european banks from the ECB at punitive rates because they cant get funding anywhere else. Or the dollar flat on its back as risk assets crash. Portugese bond rates exploding.

What could any of this have to do with Freegold?...how trivial !!!

while many here are very deep thinkers that attempt (very articulately I might add) to predict what the future will bring and interptret the meaning of Another/FOA's every word...

Doing battle between the concepts of fixed gold/fiat system vs floating....

LOOK UP !....fires burning all around you. YOU ARE MISSING THE ACTION !!

As Fofoa said this post:

"while I expect a quick and dramatic reset at some point in the near future, this process can be clearly observed happening in slow motion today"

We are in the thick of it....now!! Things moving quickly and I just hope everyone is noticing. This is what we have waited for or, at least the first act......enjoy it !!

Lets to some extent discuss what's happening now and how it relates to the concepts. Let the future play as it will....that will not change no matter how much we debate what we think it will be.

I mean no offense I just dont want anyone to let the moment pass without recognizing that each day now is full of surprises and extremely important events...cheers....humbly yours E.

It is still a sick and sad situation when you see what happens in markets day to day. USD rallies, treasury rallies ect. As Peter Schiff puts it, we are overestimating the intelligence of the financial community the world over.

I have a feeling that as Peter Schiff got burned in 08, we might get burned a little before this is over because we are dealing in a population that has everything backwards.

At this stage of worldly proceedings, with debt killing most every nation on earth (including those without any, due to impoted inflation), freegold cannot be far off.

Freegold is inevitable. Another and FOA were not seers. They were logical thinkers, grounded in history. FOFOA is an up-to-date version of the logical thinkers of the past, and better at English (prose).

It seems to me now, though that we need to think beyond just owning physical gold to become wealthy. It seems to me that we are in the catbird's seat to do good for those who depend on us--relatives, friends, neighbors--who will look to us. We need to take some fiat to buy much food, seeds, even guns and ammo, to see us through what must be turbulent times.

A dollar crash will disrupt the division of labor--blackouts, fuel outages, food supply disruptions, are all to be expected. I think we here have dwelt long enough on the obvious. We now need to get going on the things that will have made our gold stockpiles worthwhile, in the medium to long run. Agreed?

Current events are showing me clear unambiguous evidence that the "thoughts" and "goldtrail" were indeed fortelling the future path of the global monetary order with free floating gold vs fiat front and center.

The ECB's stealth monitization is just the last straw in the great unraveling.

The daily comical stream of events and ad hoc responses all lead me to the logical conclusion that physical gold is the best answer to the catastrophic monetary/societal mess we are in.

I dont need to have "faith" in Anothers thoughts. I am seeing their value/truth with my own eyes.

It's default or debasement or revaluation of gold to repair the sovereign balance sheet. Thats it...3 options and freegold is by far the best one.

My own wrinkle is that by making physical gold the official alt. to inflation/debasement fiat that this also relieves upward price pressure on other hard (inflation/debasement)assets( ag. energy etc.) that are detrimental to society if their prices rise.

Gold is the perfect vehicle. From every angle gold revaluation and status as the store of wealth par excellence is beneficial to society. No downside. Its a win/win for society and the monetary system.

Maybe not for USA/dollar suremacy and I'm sure thats why they will continue to fight it but they brought that on themselves.

I once mentioned that I buy gold not just for myself but for the others In my life that wont for themselves.

I know many here like to spread the word of freegold, but a word of caution. Be careful who you expose these ideas too. When push comes to shove those people you tried to help may as a last resort seek out your gold when it goes bid only.

My final thought is that it seems we are in the midst of a global interactive tragicomedy. If I did not laugh about it everyday I would probably cry. Obama on tv swimming in a lifeless sea telling the world the water's fine. At least ALL those present here understand the joke being played on all of us....stay safe all !!

I have prepared for both an orderly or chaotic transition to freegold. You are right...the wealth will do you no good unless you are prepared/able to protect it. Community will be very important in my opinion. Many things could return to a local level. Food production especially.

@enoughThose who do understand just do. Your true words have little value here because they are well understood. Try using this logic elsewhere you would probably be laughed at. The elections may be or may be not such a big deal. I don`t know the Irish political model (maybe that is why you are here for :-), to explain it to me). The way I see it from my perspective – until uprooted the banksters` foul weeds will continue to grow no matter who is winning/losing the elections.If a country opts out of EU it gets Freegold in an instant but could it get oil unless bled out of its gold reserves (does Ireland have any?) completely (no bargaining power for say 90% cash 10% gold/weapons as now is the case for EU/US)?Anyway I may be wrong. The explosive moves of the POOil just blocks my thinking – how long will it take to sink into the larger economy poisoning it? I have to find that answer first, others questions seem distractions and a political show. SHOW! The show will go on because it must ;-)-=Dimmed=-

I took that post to heart and sold most of my silver. I was in denial as to how much I held. And I was wrong, It was not 42 x the effort but much much more than that. Consider my deflation hedge was 40% K heads. Plus a bag of 90%. The rest in coins, no bars.

I was eye-ing those Pamp Suisse 5gr pendants. I don't have enough fiat for a box of them sisters. But easy - affordable in them frog kickens.

This election is a referendum on the Irish bank bailout(and their german/french creditors) by the Irish people.

Not an opt out of the EU but an opt out from banker tyranny !!

Even if winning party does not totally reneg on the bailout it seems highly likey the raiding of the Irish Pension fund will be made of limits to the IMF and creditors and the IMF said this will not do.

There is also potencial of severe HAIRCUTS being demanded by the Irish on foriegn senior creditors. The beginning of the end of privatized profits and socialized losses for the banking industry. A preceedent that began in Iceland and now followed by a restructured Irish bailout....portugal...spain and down the line.

The end of the bankers free lunch and large losses for senior creditors, THE BANKSTERS !! The people of Ireland now get to decide if they wish to bailout the banksters.

Did this not compute. Your comment about the Irish political model suggests you never considered this. How can you be a freegold advocate with its european roots and not dig deep into current european politics to evaluate where we are going and when? This election is about the possibility that the reign of the banksters/IMF could be ending. At least large fissures emerging. Large bank loses, bank runs, systemic failure... gold....still no lightbulbs?....and by the way Ireland I believe has very little gold.

any ideas on what has happened to jsmineset.com it looks like the crew has abandoned ship. I certainly hope not! That would be very sad, I like Jim Sinclair even if I don't always include myself in "his family and friends". He's a gold advocate icon.

I think it boils down to the paradox that FIAT as a means to paper the loss over could not be stable. Even tho we are told to be able to save in gold if choosing so, our FIAT pay checks are still at the mercy of a devaluation switch, which inevitably leads to the demand of little counter-party risk – “Could you contract me in gold instead?” In other words we prefer Saudi kinda respect, which is really a basic form of liberty.

We have here a steady theme of hard money is a bad choice as currencies yet the fact is hard money was used for thousands of years as currencies and worked fine while FIAT ones have an average life-span of around 40 years. I really don’t see how we start from the premise that everyone has to borrow and then pull out an almost monetary alchemy to separate the store of value from medium of exchange plus FIAT could be a better solution.

You have it - fiat's key flaws of it's arbitrary nature and lack of market based interest rate defines it as an historical artifact.

Gold savings plus fiat currency is still unworkable and "We promise we won't abuse it this time" will have little truck with a post currency collapse populace.

Other than fond endorsements of gold for savings plus fiat currency as the monetary model of the future, is there any explanation of how interest rates will be set in Another/FOA's future hybrid monetary world?

And how can we really trust the BIS this time with the new fiat currency?

Peter Schiff does not really understand gold. Listen to this interview with Adrian of GATA. If you can find the full interview he is in utter disbelief at the future "price" of gold. At one point he says "I would sell my gold at x price" He has little or no knowledge of GATA's work, scoffs at the idea of manipulation. I have an account with EuroPac, I began my education thru this man back in 08/04. Unfortunately he has gone "TV".When you are allowed on TV there are certain things you are not allowed to say or discuss, ie the REAL WHOLE TRUTH. Ask John Williams of shadow stats. They used to let him(Schiff) on for only 3-5 mins.with 4-5 bulls who mocked him constantly, now he sometimes gets a whole segment by himself. There are many people out there that tell 90-99% truth, it's that 1-10% that that may cost you your freedom or life. I do not trust anyone one tv or any comercial paid for media. He also pushes the Perth Mint certificates,never mentioning Aussies 1959 Banking Act which can demand all au be turned into the RBA, see section iv 41-48. So check it out, as I said I have an account at europac ( so I can take possesion of my mining certs.)and I have learned much from him but I am very wary of him.

For a monetary system to work, anyone, anywhere, must be able to exchange the currency for gold at a floating rate. This is FREEGOLD. It is all of the natural consequences that will flow from the ending of fractional reserve bullion banking, an unsustainable modern carryover from the official gold standard of yesteryear.

The definition of store of value as a monetary function is how long participants are willing to hold any excess of said money for the purpose of storing value. The separation of this role from transactional currency means that excess currency will be spent rather than stored for its long term value. What you spend it on is up to you. Freedom of choice, bra!! But the "focal point" of this global activity will probably not be baseball cards.

February 17 – Bloomberg (Madelene Pearson): “Gold imports by India, the largest user, climbed to a record in 2010… according to the World Gold Council. Purchases totaled 918 metric tons… That exceeds the projection of about 800 tons made last month by Ajay Mitra, the group’s managing director for India and the Middle East… “Indications of the first month of the year has seen a very strong demand, so the momentum continues,” Mitra said… Fourth-quarter imports rose to 265 tons from 204 tons a year earlier…”

That is close to a quarter of annual mine production and scrap supply of gold. It would be useful to know if the figure reported is net of exports or if exports are deducted from this 918 m/t.

@enoughyou write: “DA, you get it....."until” … ” Your comment about the Irish political model suggests you never considered this. How can you be a freegold advocate with its european roots and not dig deep into current european politics”1.) Now did I got it or didn`t I? What I get is that you are VERY PASSIONATE the matter.2.) I am not a “freegold” advocate I just use commonsense from time to time.you write :“The beginning of the end of privatized profits and socialized losses for the banking industry. A preceedent that began in Iceland and now followed by a restructured Irish bailout....portugal...spain and down the line.

The end of the bankers free lunch and large losses for senior creditors, THE BANKSTERS !! The people of Ireland now get to decide if they wish to bailout the banksters.”The beginning of the end of the $IMFS maybe; the beginning of the end of privatized profits and socialized losses for the banking industry – a resounding NO!you write: “There is also potencial of severe HAIRCUTS being demanded by the Irish on foriegn senior creditors.”The way I see it: The $IMFS was never designed for the bankers to take a haircut. They are saved by default because the people who deposit “money”-savings are saved by default up to 100 000EUR I presume. So there will be printing somewhere down the line. The austerity plan for Ireland, Greece, Portugal is in a sense a punishment (until 2013?), a purgatory before freegold if you wish to call it so and they will be made to accept it or leave, I think. Why? Here is why: They (PIIGSes` govs, business, common people etc.) did not “finance” their way till now out of savings but rather opted to borrow (you might argue have been seduced into debt) thus consuming sth. of value and issuing promises of payment as a collateral. They cannot honour their promises, should they continue to draw from the European pool of things of value or should those things of value be preserved for the savers in the system? So you may put it this way do we have freegold at 6000EUR/oz or 7000EUR/oz , 10000EUR? Or do we have PIIGSes kicked out for speeding the process (bringing the $IMFS to an end before a preconceived timeline).

It’s interesting to think of how things have changed over the years. Banks were started out as a facility for the savers. Bankers were supposed to serve the savers. No fractional reserve lending. If savers have some spare money they can choose to pay a storage fee to warehouse it or take on the risk to loan it out. Their money, their decision. Savers call the shot and live with whatever outcomes of it.

What do we have today? Well bankers now, especially central bankers, are us savers’ daddy. Our pay checks can be diluted whenever they see fit b/c of a “political will” or sth, that is when they bother to let you know the reason at all. Not even FreeGold changes it as we have no way to protect the future compensation that is contracted in FIAT.

I’d say even this idea of being able to save in gold under FreeGold is questionable b/c Gresham's law would make the gold owners less willing to give up their safe gold for other people’s risky & bad FIAT.

So the lions of share of the freedom in any FIAT system including FreeGold belongs to our daddy CBers. I don’t know about other people but such relationship between savers and bankers doesn’t sound like freedom to me. It sounds more like what is between peasants and kings.

I too have an extremely difficult time understanding how Fiat survives in any meaningful sense if it well and truly loses it's " store of value" function. Especially if that loss is accompanied by a "singularity" of a massive loss of purchasing power. Who in their right mind would hold fiat? Velocity would be very high. You would get paid and go straight to the coin store....to the point where you would start demanding to be paid in coins.....

By implication you raise the issues of "what halts a hyper-inflation?", "how do the citizens relate to 'money' after experiencing hyper-inflation?" and more.

These are topics I have been thinking about and discussing elsewhere for some time. I would like to take them up now but it will have to wait until tomorrow.

@ Mailon: (This is generalization but anyway) It is actually easier to explain to someone older, like our grandparents who are part of collective memory and have first hand experience on different system (gold standard) than younger generation who lives in fiat system since they were born. I tried to speak with both. It actually works, older people (some) have also more time to think/re-consider/listen instead of making immediate judgmental conclusions. On the other end I find it very difficult to show people of the same age that there exists another focal point(s) and even showing irregularities of present system and flows as a support to kickstart their brain to start to THINK about them on their own is with some people simply fruitless, what you get is only a shallow conversation. Nobody tries to name/describe the fish....No wander Another said: "It is over" and walked away. I really got this his point, also firsthand experience. It also depends much how good you are in explaining things... Try for example Richard Feynman on youtube. :o)This is not a babysitting forum, you need to make your OWN research and Your OWN conclusions, taking opinions of others has no sense. You just need to climb the mountain of knowledge on your own.@ E: I see the same, truly tragicomic, amazing, amusing, fascinating. I have a feeling that obtaining gold did first - put my extra wealth outside of this system and then second - it put me into a seat of observer. I had some understanding before but making it through the first ounce made it real.

I too have wondered what could stop a process of borrowing FIAT and buying GOLD with it, again and again... ad infinitum. I came up with this:

Closed system/economy

the Producers/Savers would soon find out that even though they can convert FIAT savings into some gold, they have difficulty spending FIAT since the other side (Borrowers) doesn't/don't produce anything. So they gradually lower the output and the borrowers are being increasingly faced with rising FIAT prices or starvation - you just can't eat gold afterall! :-). If we have a responsible currency manager whose only mandate is price stability! then we can assume that they would raise interest rates or lower the amount of currency issued since the amount of products also decreased therefor force the borrowers into bankruptcy and releasing gold into economy.

In an open system/economy this process would manifast itself in a falling currency, outflow of gold and rising prices. The medicine is the same as before (if of course a CB wants a long lasting currency).

Russian Klondike Gold Rush is on the wayhttp://www.marketoracle.co.uk/Article26467.html

"...The chairman for the Federation Council's Committee for Natural Resources and Environmental Protection, Viktor Orlov, stated that IF the new law is finally approved, an individual entrepreneur will be able to receive over 2 million rubles for two kilos of gold per season. According to Orlov, the starting capital for the equipment and tools that include a wheelbarrow, a pick, a shovel and a pump, will not exceed 50,000 rubles ($1,600)...."

*If approved or not - I just find interesting that there are more of these news lately. :o)

I enjoy monetary 'theory' a bit less than others probably. My practical nature? But I believe I have the main thrusts of it and now focus on the practical aspects.

PA,

No one said the CBs were creating a freegold system for 'beneficial' reasons. Their reasons are practical, they need a system for the day after the dollar reserve currency dies. And if you didn't like the old system, as FOA says, you will hate the new one.

Blondie,

FOA said Another was english when he was upset, after the 911 attacks. IMO the statement goes against everything that went before; he had previously made hints that Another was not of 'western mind' and even a statement that he translated Another into english. Based on the archives I believe Another was probably Japanese. FOFOA thinks he was European. There seems no evidence that he was English.

There are many possible triggers to freegold. The fact that it was planned to be rolled out around the time A/FOA were writing, again around 2010, and now possibly 2013 gives me the impression that it will never be voluntarily implemented. IMO it will be born in crisis, and there are many crises today, and foreseeable in the future. Many crises have already passed; indeed A/FOA thought one of them would have birthed Freegold by now. Time will prove all things, someone once said.

You do get what the problem is ...the banking system( long time ago I was a part of it and still cant take enough showers to get clean of it)

What I dont think you are focused on is what events might bring those F___kers down. I'm always looking for the sinkhole thats going to swallow them up :-)

I learn from your posts even if its in prose that I have to read about 5 times first

I may be incorrect but you seem to believe there is a set timeline for freegold and I beleive its eruption could happen anytime due to the very events such as the Irish election and possible bailout adjustment/ reneg

Thats why I keep watch for them. If I am correct and you think there is a set timeline then it is clear why events have no meaning to you best E.

@ enoughSorry for my grammar. I do not think in English and it is tough to express myself clearly.Y2013 is an assumption by many bloggers in this forum of a somewhat orderly transition to FG. It was presumed that because of the 2008 events the launch was postponed to this date. Sudden FG is possible but those “giants”/governments that are seen responsible for the “false start” may get burned (punished).

So, is Freegold supposed to fix the difference between hard money/soft money advocates, individualist/statists, producers/non-producers of the world? A meritocracy would have to span a very large gap.T

@enoughIf you just bothered to check the link provided by raptor just two comments above, you would have known that the crisis was “in the making” since 1995 as conservative estimate (or since 1913 if you wish) with two major “eruptions” for all to see, namely the “tech-bubble” 2000-2001 and the “financial crisis” 2008≈2020(just guessing).you write: “or will we all be sent freegold manuals in the post on a a pre-set day in the future” Not a chance.But FWIW there can be a controlled explosion of POG up to a CERTAIN level to negate all $USD denominated debts and cleanse the system. Or there can be an unexpected paper gold(promises of gold delivery) burning chemical reaction sending noxious price discovery fumes for a period of time while gold goes into hiding. The problem with the latter is that while physical gold searches for its equilibrium price all other things of value will be in complete disarray and comparative evaluations will be close to inpossible to make (ratios – e.g oil:silver). In other words all futures` markets will crash in a domino effect.-=Dimmed=-

”If you can't explain it simply, you don't understand it well enough.”

which neither says nor implies that an explanation should be limited to a paragraph. I include line breaks below only for ease of reading; it can be easily and honestly reformatted into a single paragraph if you insist.

========================Simply put, anyone, anywhere, must be able to exchange the currency for physical gold at a floating rate, in order to assume unambiguous ownership of said gold, and vice versa.

Gold has then fully assumed the store of value monetary function, as an unencumbered physical asset outside the monetary system.

Paper/digital currency continues to be utilized as the highly-efficient medium of exchange.

These two functions are thusly harmonized: whenever a currency changes in volume or velocity its exchange rate in gold is automatically adjusted by the market, resulting in a perfectly equitable and easily understood system for everyone.

The buying power of savings is kept constant, which creates certainty; the currency’s fluctuations are stabilized; and the opportunity for complete due diligence to be undertaken arises, minimizing malinvestment and misallocation of capital.

This simple change results in a complete paradigm shift into an equitable system of integrity, with immense positive flow on effects in all spheres of human interaction and activity.

This is an emergent system which will arise spontaneously from the collapse of the current unsustainable one, as individuals the world over simultaneously attempt to preserve what liquid wealth they can in what will be their natural focal point - physical gold.

=======================

Some further Einstein quotes to assist in the absorption of this simple explanation of my understanding of Freegold:

“Any intelligent fool can make things bigger and more complex... It takes a touch of genius - and a lot of courage to move in the opposite direction.”

“A man should look for what is, and not for what he thinks should be.”

“The true sign of intelligence is not knowledge but imagination.”

“To raise new questions, new possibilities, to regard old problems from a new angle, requires creative imagination and marks real advance in science.”

Thanks for the link to that Aaron Krowne piece. We should probably take note of this statement:

The key event that happened around 1995 is that the fractional reserve ratio was not only lowered, it was effectively eliminated entirely. You read that right. The net result of changes during that period is that banks are not required to back assets which largely correspond to M3 or "broad money'' with cash reserves. As a consequence, banks can effectively create money without limitation. I know that sounds hard to believe, but let's look at the facts.

I have to side with Rui on this. No one will want to part with the precious to pay fiat bills, NO MATTER WHAT THE EXCHANGE, unless one absolutely had to. Sure, maybe at some point fiat and the governments that issue it will be sufficiently stable that one can intermingle with some degree of confidence, but it isn't happening now and it won't happen for some period of time after the singularity.

The only exception to this is if, as FOFOA posits, the Fed and CBs worldwide revalue gold as part of a plan rather than letting it become a mad scramble of "gold vs the CBs".

That is, if the Fed comes out "tomorrow" and says "we are buyers of physical gold at $50,000 ounce for unlimited amounts", I suspect they could preserve fiat by virtue of gold being now bid only. At some point an equilibrium would be reached on price, and maybe then they would maintain some discipline.

But if CBs DO NOT do that, and the market instead creates a "run on fiat", well, then fiat as we know it is gone, IMO. And then it's ration book time (another form of fiat of course) because the gold will simply disappear.

Do you realise that you just stated the reason why Freegold-RPG is inevitable?

The fiat currency issuers either make an "official market" for gold (as A/FOA claimed) or the whole shebang goes down.

The fiat issuers can issue currency for the purchase of gold (and only gold) with no objective limit. IMO issue they will, to save what they want to salvage from the current system.

However this game may run longer than many of us expected. Taking gold for a run to, say, US$1,700 might help to ration demand versus the available supply. If that isn't high enough they can take it to $2,000 and so on. The PTB clearly want to buy time.

A shocking price is being enacted on the world's poor but how do you reverse trends like those on display in Egypt without a major dislocation:

The crush of poverty is felt under the weight of a population of 80 million people who live in a country where average annual rainfall is less than two inches and where only 3% of the land is arable. Aside from a narrow strip along the life-sustaining Nile River, Egypt is basically an inhospitable desert.

Yet the population of Egypt has tripled to 80 million today from 27 million in the early 1960s. While the birth rate for an average Egyptian woman has fallen from six children to just over three, it still fuels more than 2% annual growth in the population. At this pace, Egypt’s population will double to 160 million by 2050.

Richard Feynman was asked by a reporter to explain the work he did that led to his being awarded a 1965 Nobel Prize in Physics. I believe Feynman's response was, in essence, "If I could do that (explain it to the likes of you) I wouldn't have won the prize."

Let's address your and FOFOAs explanation of FreeGold:1) floating rate for Gold.Ahh, I'm with Peter Schiff with this...we already have that now!Go to Kitco.com and bring up the chart every goldbug knows by heart... that's GOLD FLOATING against the US dollar.

2) Gold as a "store of value"Ahh that's why most people buy it.It's already an established thing, a done deal.

3) "Paper/digital utilized as a medium of exchange".Ahhh .. earth to Blondie... it ALREADY is. In the U.S. it's called "the dollar".

Come on guys... I'm Gold friendly and you can't even make a persuasive case with me (or Peter Schiff... he couldn't even understand what a Freegold disciple was talking about.... at least I have some idea).

As for the Powers That Be, Sorry Guys... they will eat you up and s... you out if you come into a public forum and can't even articulate in a concise manner what you propose, how it's different from the existing system and any other alternates.

Oh . and please... leave out scripture quotes from our heavily fathers Another and Friend of Another.

Put it in your own words. Make it lucid.

Realize there's a whole world out there that you need to convince.me? ... believe it or not, I'm a friendly.

Mailon, even as you deride his writings, it is obvious that either you didn't read or didn't understand FOFOA's posts. As such, given your comments, I must conclude that you are, without doubt, a jackass.

Look at your second post. You insult me for a supposedly poor explanation of freegold on the radio yet what I said seemed to stimulate your claim to fame, that "what we have now" is no different then freegold.

"...whenever a currency changes in volume or velocity its exchange rate in gold is automatically adjusted by the market..."

First, velocity does not change the buying power of currency. Please refer to the Shostak article:

http://mises.org/daily/918

Second, varying the amount of fiat currency causes economic distortions. We are living through that. Not good. Fiat currency doesn't work and, no matter what they say, central bankers and governments cannot be trusted with our currency. Even if they could be trusted, they cannot know the interest rate. A fiat currency system relies "wise people" setting the interest rate. That doesn't work.

Third, fiat currency depends on faith that has been fatally abused. People will not trust fiat currency for another go around in any economically meaningful way. Bus tokens yes, but major purchases in fiat will likely not be possible.

In summary, your points above read like a wish list but I do not see where logical support for these assertions.

@ all vainglorious responders Come on guys, all dogs barking at a cat. You all love to be provoked, don’t you?Touchy…@costataYou write:” Why does base money matter?”and then again:“However this game may run longer than many of us expected. Taking gold for a run to, say, US$1,700 might help to ration demand versus the available supply. If that isn't high enough they can take it to $2,000 and so on. The PTB clearly want to buy time.”What is your FG target 50 000USD/oz, 60 000, 70 000? Ah, I guess base money does matter.Then you have 1700->2000->? you can`t catch the horizon with speeds like that it`ll run faster from you so why not go directly with the speed of light say 55000USD and then recalibrate?You make a good point about the world`s poor, prolonging FG can only make the pain more acute. The debtor countries` budgets must be balanced A.S.A.P. and then we can have FG in an organized manner. Or we wait for a SHTF moment.

"What I suggested is that gold serves as a key reference point to allow people to assess the relations between different currencies," Zoellick told the press here at the end of his meeting with French President Nicolas Sarkozy in the Elysee Palace.

"I didn't propose a gold standard, which is an important distinction because it would directly link currency to gold," said Zoellick, denying reports that he had called for a return to the " gold standard" to modify the present monetary system, which he called "Bretton Woods II."

"The system should also consider employing gold as an international reference point of market expectations about inflation, deflation and future currency values," Zoellick wrote in an article published in Monday's Financial Times.

Seems TPTB don't see any difference between RPG and the current system [/sarcasm

3. After step 1 is complete, and step 2 is used by the majority, "paper/digital" will be used only for medium of exchange.

Lastly, I can tell you do not understand the concept because no one needs to be convinced for Freegold to work. Remember it is not seen as 'the solution' but rather what will happen naturally as events unfold.

I posed that question about base money in order to see if it would attract any responses. A lot of deflationists argue that base money no longer matters because it is a tiny percentage of the "money" supply compared to "bank credit money" and/or "perfect money substitutes".

to your shostak article I would say he doesn't understand one thing about confidence, and since you seem to take the man highly, try to read Martin Armstron on confidence and velocity for a change. you just might change your opinon here. Armstrong makes a much stronger case. "To save or not to save, that is the question !" simple as that.

http://www.martinarmstrong.org/files/The-Money-5-4-10.pdf

to your second point, Fiat works just fine, you use it every day no ? It is just a very bad store off value, and that could easily be solved, but market will find equilibrium anyway. nature seems to work like that :-)

Could you explain to me why people in Germany easily adapted to the DM after the collapse of the reichsmark ? When people will see that the fiat will buy you the bread mr Shostak seems to like so much, people will use the fiat.the want the money to be easy !

you say the amount of currency should not be varried, I say you will live through many depression.Why did the silverbugs in the late 1800's want silver so much instead of gold ? imagine fiat being the silver of today(in moneyterms).

on interestrates under Freegold I am still thinking. I seem to think it doens't matter all that much, since ROI has less importance because inflation is not eating away the savings anymore. evolving thought here ...

The only way a gold standard works is if borrowing is done by way of a discount. Borrowing and attempting to pay interest is even more destructive under a gold standard, as opposed to a fiat currency, because the circulating currency (gold) is inherently sounder.

A true gold standard provides the rock and an interest rate on gold supplies the hard place.

@Texan: What about this choice: as long as it is available/possible to try to slowly transfer into higher gold price levels to ease the pain of a sudden shock, somewhere closer to that number? In other words - what about to try to "manage gold price" as far as possible (when it is still possible and there are available tools for it) and try to control the damage?

Reading this tread is pretty depressing... This is becoming a place of cult and circular arguments. So far I still did not get any clear answers from anybody about how would the ratio of the physical gold and the future fiat become stable.

I do not accept both answers, I've got so far, that the "suffering of the birth of freegold" will create honest managers (Hyek says so), or the "market forces" will make the relationship of gold/fiat stable. -- Both amount to "slippery slope of hope" not a valid scenario.

The very fact that the price of free gold will be "floating" and not "raising" suggests volatility. This means that the price of gold will go up and down -- and if it does, you can forget about the whole concept -- It will not serve as medium of savings -- to do so, the currency price of gold would have to be always going up. Plus: because it will also be based on exchange, it will have a "bid" and "ask" differences which will make the conversion expensive.

Catch 22 -- if it is stable, then why bother with gold, if it is unstable gold is expensive and risky.

The only way it would work would be, if the exchange costs are zero, and the currency value in gold would always be going down. Somehow, A, FOA & FOFOA are all too shy to suggest such system... System based not on a "floating fiat" but a "sinking fiat" --And this is where the dog is buried...

__________________________

Another thing that bothers me with the whole thing is the incentive for the government to prop their currency -- Why would the current incentives to devalue their currencies become disincentives? Where would it come from? Instead of wanting to export, countries would suddenly want to import?

I must add that Hugo Salinas Price ideas about monetizing silver in Mexico are suggesting a system where fiat is always sinking vrs. silver coins issued by Mexican government. Official exchange of the official Mexican silver coin would be free of charge and the price would only be adjusted when the spot market price of silver is higher then the price of the Mexican coin. It would never go down, so it would become the means of saving. To me it is a plan that makes sense, its mechanism is simple. (Even though it rests on the goodwill of the government)

I fear I must agree with you. Although I have learned a lot scouring through the archives of A/FOA/FOFOA, I fear this blog is becoming too much inward-looking.

As an example, IMHO, I do understand the fact that the quarterly MTM Gold-position of the ECB is in fact a preliminary, or a base-model of reference point gold, but the ECB needs a unified Europe to make that work. Or at least a big enough group of countries participating. With what is going on in the world these days, chances are tangible that a unified Europe will not survive. However, that fact is not being dicussed here.

Because A/FOA could not have foreseen the sociological tsunami that is taking place right now, it is as if it is not realy happening if I read some of the argumentation posted here.

But it is happening nonetheless.

Although I do believe the argument (and acted accordingly) that the best store of value is gold, and that any means of transaction will do, as long as I can buy gold with exess of those means, I am a bit put off by al the theoretical argumentation (that sometimes borders on religious indoctrination) posted here that tries to predict the future.

Polarny,I think perhaps you are not getting the answers you wanted because you are not asking the right questions. You ask why the price of gold will go up and down under Freegold. Try holding the other end of the stick; ask yourself "why will the value of the dollar go up and down when gold remains a stable store of value under Freegold?".I'm not just playing games - it took ages for me to get my head around this "simple" question...

g., the reletaionship between EC politics and the Euro has been greatly discussed :http://fofoa.blogspot.com/2010/06/stress-relief.html

Martijn commented:"A currency union is strongest without fiscal union. Then countries are no different from companies. If they borrow and cannot pay back, investors lose money. The currency is unaffected."

and Costata noted that FOA said while Another was posting:

"Basically, this is the direction the Euro group is taking us. This concept was born with little regard for the economic health of Europe. In the future, any countries money or economy can totally fail and the world currency operation will continue. What is being built is a new currency system, built on a world market price for gold."http://www.usagold.com/goldtrail/archives/another4.html8/10/98 Friend of ANOTHER

@ PolarnyI`ll be brief. Anything but outright consumption is risky. It was so, it is so, it will be so! Period. FG is the least risky way to save because first it does not hamper others to produce, second it keeps the sticky fingers of the debtors/governments/politicians /banksters away from your nest egg. It always comes down to this; gold or no gold: is there a pool of goods/investment vehicles large enough at the moment of dissaving to satisfy the person up to his/her needs and expectations.It is as simple as that. Really!

@Polarny: "how would the ratio of the physical gold and the future fiat become stable?" -> What if we look first into what is making present monetary system (fiat+"encumbered" wealth asset) unstable? Then what is wrong with gold standard? Also in one of previous posts to Bron there was this link with many thoughts which may help in understanding exactly that: http://www.usagold.com/halldiscussion.htmlBtw: It is healthy that you get upset with unsatisfactory answers, best engine to get further :o)

@Sean, the Martijn´s comment was IMO very good, highlights the last week Trichet´s comment - our monetary union is good, politics have to improve in fiscal matters.

@PolarnyYou write:“…because it will also be based on exchange, it will have a "bid" and "ask" differences which will make the conversion expensive.”Yes it will cost you some because to save is actually a LUXURY and it is HARD to do in the right way. Still IMVHO saving in gold will be very much preferable when you take into consideration the volatility of other savings` media. The middleman/computer net operator will be demanding payment for their cervices of finding the right COUNTERparty for you. The way to lower your “bid” and “ask” margin is to be a gold dealer yourself but then you`ll not have time for anything else, will you?-=Dimmed=-

"The only way it would work would be, if the exchange costs are zero, and the currency value in gold would always be going down. Somehow, A, FOA & FOFOA are all too shy to suggest such system... System based not on a "floating fiat" but a "sinking fiat" --And this is where the dog is buried..."

+1000

The problem with the argument for freegold birth is that it is an organic inevitability unto itself. However, the complexity of the system, namely the human element (political) is the foil. Let's not forget the current system was designed by the very people who are now characterized as unable to come up with another "creative" solution.

What if the "solution" is not top down but bottom up (again)? Check the Egypt cabinet reshuffle for evidence of just how pliable is the "crowd." All that hard work in the square and they got the same government - meet the new boss.... The human pliability isn't lost on the incumbants in DC.

Does FG assume a peaceful transition? – Not necessarily but sure it will make life interesting.

This piece is in remembrance of the great work of the enlightener – Another.http://www.youtube.com/watch?v=iERLBLDk1c8Thank you AnotherThank you FOA. Thank you FOFOA.P.S.Some may wish to replace Maryanne with POG.

FreeGold is a great concept and I agree the current system is unstable and unsustainable and should evolve spontaneously into FreeGold. Peter Shiff’s question: “how is FreeGold different than what we have today?” is answered as: FreeGold is not suppressed using PaperGold as it is today. This begs the question: How do we get rid of the PaperGold suppression of Gold to make it FreeGold? Sure, if the currency collapses then Gold becomes free of PaperGold suppression, however FOFOA does advocate that FreeGold actually requires a paper currency to float against. So the issue and question becomes: As long as paper currency continues to exist, how do we prevent PaperGold from suppressing the price of Gold, preventing Gold from becoming FreeGold? I agree that BlackGold is 10xRegisteredGold, and if the PaperMeisters get a lot of this BlackGold what is to prevent them from fractionalizing it again to suppress FreeGold? Comments?

Bix Wier’s solution is take all the physical Silver off the market. Gold may follow Silver up to FreeGold heights. However, what prevents the PaperMeisters from suppressing Gold after this? Passing a law does not work. We already have laws against price manipulation, and they are not enforced because the banks own the regulators. Bust the banks? Hardly, they get to conger up as much currency as they can imagine. Comments, please!

Freegold: When every ounce of gold in the world is allocated and the currency of each nation floats against that nations total gold thus all currencies orbit gold, each at a distance equal to the amount of currency in circulation divided by that nation's quantity of gold. Viewed from above it would be a beautiful Newtonian system easily charted and watched by Billions live daily! Velocity would be velocity.

Hello Redhill,And thank you,for a moment there I thought it might all be wonks.

On hearing of the Way, the best of menWill earnestly explore its length.The mediocre person learns of itAnd takes it up and sets it down.But vulgar people, when they hear the news,Will laugh out loud, and if they did not laugh,It would not be the Way.

FOFOA is getting people from across the world to engage... that's a good thing (well, as long as they leave their weapons at the door).

Blondie.. I answered on his site.You'll just have to go there to read it.

One poster asked me if I could explain the current system in a paragraph.

Here goes:

A ponzi scheme imposed by a banking cartel that bribed U.S. politicians to get enacted. This 'system' is predicated on fractional reserve banking and the need for ever expanding fiat money supply to cover interest on the debt...and INTEREST is something Fractional Reserve Banking does NOT loan into existence. Underlying this is a handful of rich families (the Feds founders) who gain from every transaction in this entire system. Yes they make money...even in their sleep. And they buy off Congresses and Presidents to ensure the status quo remain just that.

You say: "Nobody will outlaw anything. Paper gold will collapse under the immense and unbearable pressure of supporting the mind-bogglingly huge weight of the $IMFS Global Ponzi Extravaganza that has levered up from its very existence, and the value which survives this implosion will be consolidated into physical gold.The impact, repercussions, and most importantly the resulting new perspective/paradigm gained will be such that no one will want to go (back) there again, no legislation required.

Put it this way: when you burn your hand in a fire, do we need to pass a law to prevent you doing it again?"

-----

For those who have not read the first post, I was responding to what FOFOA had written quite clearly in the 2/9 "Reply to Bron" post:

Quoting Another: "Keeping gold out of the fiat arena would be more simple than many hard school advocates envision. The key to that is found in the implementation of international law. The leading economic countries (EuroZone in the future) would have but to establish a protocol that forbid the enforcement of collateral attachment anytime physical gold is traded, lent or involved in a trade."

Then, quoting and agreeing with the words of Atticus: "... it can be as simple as non-enforcement of gold lending contracts in the courts. The intent of the law would be not so much to prevent you from lending your gold as it would be to protect you from unscrupulous borrowers who would take it and spend it without the ability to get it back."

In response to this, I asked a clear question. I kept it short and simple: "It seems freegold is dependent on outlawing (globally) a paper gold market. How is this accomplished?"

Blondie, *you* may believe no legislation is required, but that is *not* what FOFOA posted.

Why diminish the validity of my question with a condescending non-response?

Do you really expect anyone who has read any history (or lived it!) to believe that the pain of a paper money collapse will somehow cause the entire human race to willfully abandon the notion of gold derivatives forever? Really?

It would nice if those of you who consider yourselves to be among the Freegold "enlightened" would lighten up a bit and try to advance the discussion instead of circling the wagons at the slightest hint of challenge to the FG doctrine.

Another interesting guy, DOUG CASEY, who see`s it all except freegold. Here are a few quotes from his latest piece. (I am a client and emailed him about freegold, got no reply yet)

Casey writes....

`I'm not going to put a date on it, but it's starting. The next ten years are going to be the most interesting decade in centuries. The events that are now under way – economic, financial, social, technological, political, and military – have the promise of being the biggest thing in a very, very long time.

If we're going to succeed, or even survive. Sometimes you have to call for a change in a major trend – which is risky. But not nearly as risky as getting trampled by the mob after it actually changes. I'm not afraid to leave the mainstream. In fact, I far prefer it, whether I'm right or wrong.

Do these pro PM folks talk about 'freegold'. Do they even know what 'freegold' is.

Do they even care.

They invest in and promote PMs without lengthy debates about the exact method PMs have to be instituted. Somehow they manage to embrace it without having to turn it into a cult, without debates on ... 'how many angels can dance on the head of a gold coin'.

Anyway, PMs are just a portion of the fight for justice. The real danger is Central Banks and their political influence.

When you talk about you, me the next door that can exchange gold for fiat or vice versa you're talking about ants that take a few crumbs of the table.

Did you see Sprott complaining recently he couldn't buy physical silver because it was nowhere to be found? Or when he approached IMF to buy some gold and they just told him to "go away". And he operates with less than a billion dollars.

Before 1971 it was believed that when taking any amount of dollars to the US Treasury you would get the amount of gold that reflected the fixed price of $35. Do you see it? NO problems converting billions of dollars to tones of gold!! That myth was busted a bit later as you know.

When Blondie speaks of not being able to convert fiat into gold he means gold in size, as in tonnes! Because that what China and others are interested in - converting savings in gold.

What we get at our dealers is just a side show for the masses or maybe a clever plan to promote ownership of gold as a credible store of value?

Regarding the price before/after Freegold

Look at it this way. When you fill the tub to the maximum capacity and remove the cork (english is not my first language) you see a vortex build as water flows out. This is our current position paper wealth/gold stocks. This is the reason the price of physical will explode as the water completely runs out. We have Freegold. If you dont't put the cork back then any new water you pour in (printing paper) it would just flow out through an increasing price of gold without even creating a vortex.

a) extreme cycles - those that think we are just living through an extreme economic cycle and gold is just a cycle play which you sell out at the top when it bubbles and then hold cash and/or reinvest into the next asset class.

b) end-of-cycles - those that won't sell into "bubble" prices because to them that indicates the end of fiat and all you will be left with is worthless paper dollars.

People in group a) will probably never understand freegold whereas group b) will get it. It would be interesting to categorise your list into these groups.

Group b) also splits further into these two groups:

b1) gold money - when fiat breaks, gold will/must be used as money in some way and as a store of value. Antal Fekete is in this group.

My comments on the following statements:“How we get there is easy to visualize. As the physical reserves within the BB system are all moved into allocated accounts, at some point the remaining claims will simply have to be cash-settled. At that point all paper gold markets will cease to exist and all that will be left is the stable supply of above-ground physical gold in the absence of external inflatable (or deflatable) influences.After the failure of paper gold liabilities to continue trading at par with physical during the dramatic revaluation, every discrete piece of the 160,000 tonnes of above-ground gold will be **unambiguously** owned!”

While I advocate for these outcomes I see the following problems:What prevents the PaperMeisters (i.e. fractional reserve PaperGold Bullion Bankers) from taking delivery of the 1.6 million tons of BlackGold (which is 10x greater than existing supply of 160,000 tons of RegisteredGold ref: Gold Warriors and Bix Wier) then fractionalizing it 100 to 1 to create 160 million tons (5.12 Trillion Troy Ounces) of PaperBlackGold and using this with their market rigging software to drive the price of gold down to $4 per Troy Ounce? I say nothing prevents this! Yes, they may choose to do this after Gold reaches $100,000 per Ounce.

"What prevents the PaperMeisters (i.e. fractional reserve PaperGold Bullion Bankers) from taking delivery of the 1.6 million tons of BlackGold (which is 10x greater than existing supply of 160,000 tons of RegisteredGold ref: Gold Warriors and Bix Wier) then fractionalizing it 100 to 1 to create 160 million tons (5.12 Trillion Troy Ounces) of PaperBlackGold and using this with their market rigging software to drive the price of gold down to $4 per Troy Ounce? I say nothing prevents this! Yes, they may choose to do this after Gold reaches $100,000 per Ounce."

Doesn't this imply though that the holders of the "black gold" sat on it while gold hit $2200+/Oz and did nothing with it, knowing that 30 years later they would be able to cash-in? This seems incredible to me.

I agree - "greed" might be their defining characteristic. But my question is, why didn't this show itself 30 years ago? I haven't read that Gold Warriors boob - its on my list - but can you convince me people would hide gold through a massive spike because the next one, in 30 years, will be bigger?

Buyers of RegisteredGold have proceedures and rules to follow which prevent them from entering the BlackGold realm. Sellers of BlackGold also have limitations which have prevented them from entering the RegisteredGold market.

The Yamashita's gold stuff was nonsense according to my source. The Japanese stripped the valuables (gold etc) from China (pre-WWII) and South East Asia during WWII.

At the end of the war the Japanese handed over the gold plus military basing rights in Japan to the Americans in exchange for the "no war reparations" deal.

Some say the gold went to the CIA. Who knows how the American agencies who got their hands on the gold used it. The notion that Marcos got his hands on anything except a few piles of that pillaged gold is an invention of the Seagraves. There is no "black gold" except oil.

It’s a very long time ago that I made an attempt to discuss this subject (black gold).My experience was that nobody had read that book (except the author of Thunder Road Report) or that they preferred to dismiss it.

This book is history IMO and so many intelligent people prefer to ignore. Up to now I haven’t seen any justified or documented dismissal of it. This book has never been written.

That could be a very black swan for all gold hoarders.

Now back to these 160K. What exactly do we know about its location, form, owners?I would say the data are completely bogus.

The black gold is Asian, most of it Chinese and that is very political. There are so many chances that this amount of gold or parts of it have already been sold. Who are/were the buyers? Those notorious couple of families of world rulers? Conspiracy theory, dismissed.The oil producers? Maybe. How much do the CBs hold? Maybe the US have much more than is known.

Actually I think any price projection will fail. Unfortunately the whole thing is a gamble and we are all gamblers. We are small shrimps quite afraid re our future and we search for a solution. That’s why we read FOFOA and the crowd mentioned above.

One of the connections described in Gold Warriors is that via Perth Mint parts of it have already been sold, that the US had paid with it their wars, weapons, development, space programs. The question is who holds what, how much is still hidden or has not been brought out of the Philippines. I am very disappointed nobody is interested in that book. MMT talk, future of FG/RPGplenty of theories but nobody would touch this damn book with a pole. What kind of bias is that? Self deception? Denial? Gold herd mentality?

I'll put it this way, because it's in the news; If Gadaffi decided he would use the EURO as fiat, that doesn't mean Libians would make the same choice, certainly not now.

Through human action and generations of unencumbered economic transactions, people have come to the realisation that gold is the best store of value.

The EURO, however cleverly designed, wasn't born out of the open market-place but created.

As I understand it, RPG can only come through fruition if "they" let it, or in a SHTF-scenario, if the "designers" of our world lose control altogether.

There is absolutely NOTHING that convinces me that all of a sudden people would look at the EURO as THE transactional means.

It could very well be central banks stop existing altogether. It is not as if they were CREATED right after the BIG BANG, now were they, which means that our world would keep turning very nice indeed even without central banks, or centrally planned fiat-money.

And that's what I mean by stating that this site and it's contributors are a bit too inward-looking.

For a centrally planned fiat currency to exist, you need a central planner. IMHO a lot of this central planning is crumbling before our very eyes.

So yes, I believe gold is the nec plus ultra regarding wealth-storage, NO I do not believe it will be necesserily the EURO (or any other fiat money for that matter) that will perform the function of means of transaction.

If I were paid in pieces of string, and if I could buy gold with exess pieces, that would be fine with me (if pieces of string is what the unencumbered market-place decided on)

Just let the marketplace decide. Central planning has gotten us in enough trouble already.

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